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By Nick Harris
6 October 2010
The acrimonious battle for control of Liverpool is taking a series of extraordinary twists following two “credible” bids for the club which were rejected on Tuesday by owners Tom Hicks and George Gillett, who are now seeking to remove MD Christian Purslow and commercial director Ian Ayre from the board.
One bid was from New England Sports Ventures firm of John W Henry, the major shareholder in the Boston Red Sox MLB baseball franchise, the other from an unnamed party reported to be Asian, perhaps Chinese. The second bidder has “nothing whatsoever” to do with the former Liverpool bidder Kenny Huang, a source has confirmed.
Both bidders have offered to clear Liverpool’s debts of £237m with RBS and Wachovia, and are said to “tick the right boxes” as “credible” candidates to take the club forward. In other words, both have shown proof of funds to clear the debt and make headway with a new stadium.
But crucially neither bidder offered any money to Hicks and Gillett for their 50-50 shares in the club. Hence the rejection by the Americans, who have issued a statement saying the bids undervalued the club and that they remain committed to finding the right buyer. That same statement makes it clear the owners want one thing above all: some cash. STATEMENT IN FULL HERE
A legal process is now underway to stop Hicks and Gillett bringing two of Hicks’ people onto the board (son Mack and business associate Lori Kay McCutheon) amid suggestions that Purslow and Ayre have been suspended but not in a way they believe to be legally valid.
The key arguments to be won and lost, and developments to watch for in the coming days are:
- Liverpool’s chairman Martin Broughton, along with Purslow and Ayre, believe Hicks and Gillett have no legal right under the Companies Act to remove Purslow and Ayre.
- If Broughton-Purslow-Ayre win this legal skirmish – and their lawyers believe they can – then the trio will remain on the board and should be able to vote 3-2 against Hicks and Gillett in favour of one of the two bidders. In that scenario, the end is nigh for the Americans, perhaps to be replaced by other Americans.
- If Broughton-Purlsow-Ayre lose the legal battle for their places on the board, Hicks and Gillett will install two of their own directors, Hicks Jnr and McCutcheon, guaranteeing the Americans a 4-1 majority in any vote on any board matter, including the sale of the club.
- If the board changes in the Americans’ favour, the fate of Liverpool will fall into the hands of RBS. The Americans loans are due to be repaid by 15 October. If they can’t pay, RBS has to decide whether to “roll over” the debt (ie: extend the time for repayment), or call in the loans.
- RBS will be loathe to give Hicks and Gillett more time. If RBS calls in the loans and Hicks and Gillett cannot pay, then the Americans shares become worthless and RBS will take over. It is presumed the bank would then sell quickly to one of the two bidders now in the frame.
- The only scenario where the endgame isn’t nigh is if Hicks and Gillett succeed in ousting two board members, then find a lender to re-finance them. Twice already, Liverpool’s board has blocked refinancing. With the board altered, a hurdle would be cleared, but finding a lender won’t be easy.
Liverpool issued a statement this evening saying: “The Board of Directors have received two excellent financial offers to buy the Club that would repay all its long-term debt. A Board meeting was called today to review these bids and approve a sale. Shortly prior to the meeting, the owners – Tom Hicks and George Gillett – sought to remove Managing Director Christian Purslow and Commercial Director Ian Ayre from the Board, seeking to replace them with Mack Hicks and Lori Kay McCutcheon.
“This matter is now subject to legal review and a further announcement will be made in due course.
“Meanwhile Martin Broughton, Christian Purslow and Ian Ayre continue to explore every possible route to achieving a sale of the Club at the earliest opportunity.”
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