Liverpool Board To Veto Mortgage Plans

Liverpool's owners George Gillett
and Tom Hicks attempted to
refinance their loans this
summer by mortgaging the
club's remaining assets - the
stadium, training ground, players
and guaranteed TV revenues.

There are fears the American
owners might attempt another
refinancing deal ahead of the
October 6 deadline to repay £237
million owed to Royal Bank of
Scotland, plus the £60 million of
additional fees run up since April.
But the rest of Liverpool's five-
man board would - once again -
legally block any attempt to use
the players or stadium as 'assets'
to raise a mortgage to pay off
existing debts. Any refinancing
will be opposed by the board
who can outvote Hicks and Gillett
3-2, but the Americans might
issue a legal challenge.
At present, the £40 million annual
interest repayments come
directly from club profits but
ESPNsoccernet has learned that
the debts are not loaded against
the stadium and players.
When Hicks and Gillett tried to
find a new £290 million
'mortgage' using the stadium
and players as assets a few
months ago, the board threw out
the proposal and took legal
advice to ensure that they were
within their rights to do so.
With the October 6 bank deadline
rapidly approaching, Hicks and
Gillett stand to lose their
stranglehold on Liverpool if RBS
chooses to take over the club
and hand it over to their asset
recovery experts to sell as a
distressed asset.
An RBS effective takeover of the
club from the October 6 deadline
would meet with Premier League
approval. Liverpool have also
informed the Premier League
and UEFA that they have set aside
financial measures to ensure that
they can continue to pay the £8
million-a-month wage bill and
fulfil their fixtures this season.
When asked if the club could still
afford their substantial wage bill,
a spokesman said: "Liverpool FC
has prudent working capital
facilities that allow the club to
make proper provision for
outgoings as and when they
arise. These working capital
facilities are totally satisfactory to
both the Premier League and
UEFA."
The annual wage bill in the
2008-09 accounts was £90.8
million and this year the figure
will be around the same, but for
the first time Liverpool have
dipped into the red.
When asked whether the
crippling £40 million interest
repayments which wipe out all
operating profits are paid
monthly, putting a strain on the
club's cash flow, the response
was that, as such detail is not a
matter of public record, the club
have declined to answer.
However there are fears that the
club is heading for financial
meltdown unless a new owner
can be found, and so far there
are no "credible" bidders. There
has been nothing from a mystery
bid involving Keith Harris, let
alone the Kenny Huang bid that
also failed to materialise.
City experts are now estimating
that Liverpool's price tag in an
RBS fire sale could be as little as
£150 million, far short of the
original expectations of Hicks
and Gillett, who demanded £800
million and then dropped their
asking price to £600 million.
Talk of a takeover before the
transfer window proved to be a
disappointing false dawn, and
City financiers believe the value of
the club will now plummet.
Liverpool suspect that potential
new owners are waiting to grab
the club for a knock-down price
when RBS faces the prospect of
selling the club itself from the
October 6 deadline, when the
bank's £237 million loan has to
be repaid.