Liverpool court battle starts as new bid looms
The legal battle to force Liverpool's American owners to sell to the Boston Red Sox owners reaches London's High Court on Tuesday, while a Singaporean billionaire waits in the wings ready to announce an improved bid.Updated: Oct 12, 2010 08:47 IST
The legal battle to force Liverpool's American owners to sell to the Boston Red Sox owners reaches London's High Court on Tuesday, while a Singaporean billionaire waits in the wings ready to announce an improved bid.
The court hearing takes place exactly a week after Liverpool co-owners Tom Hicks and George Gillett Jr. tried to oust two rival board members to prevent them sanctioning a 300 million-pound ($476 million) sale to the Boston bidders, which they claimed undervalued the club.
That bid was favored over a similar one from an Asian investor, who was named on Monday by two people with knowledge of the situation as Peter Lim, who has not given up on buying Liverpool. The people spoke on condition of anonymity because of the sensitivity of the proceedings.
But Red Sox owner New England Sports Ventures has already signed a binding takeover agreement and Royal Bank of Scotland, which holds the bulk of the club's debt, announced Monday it has already been granted an interim injunction to prevent Hicks and Gillett changing the board structure.
RBS wants the sale to the Red Sox ownership group to proceed and has already held off from putting the club into financial administration, a form of bankruptcy protection which would also see the club being docked nine points by the Premier League.
RBS, which was partly nationalized two years ago to save it during the credit crisis, could have put the club into administration even before Friday's original deadline to repay 285 million pounds ($453 million) of debt because Hicks and Gillett breached loan agreements, two people familiar with the situation told The Associated Press on Monday.
They spoke on condition of anonymity because of the sensitivity of the situation. Gillett has defaulted on a $75 million loan from American hedge fund Mill Financial, which helped to prop up a previous refinancing of the loan used by him to buy the club in 2007, one of the people said.
Mill Financial now technically controls Gillett's 50 percent stake, meaning that there has been a change of ownership constituting a technical breach of the agreement with RBS, the person said.
Mill Financial didn't return calls seeking comment. RBS is returning to court on Tuesday to reassert the power of independent chairman Martin Broughton to appoint the board.
The bank says Hicks and Gillett forfeited control of the club to a new chairman, Broughton, as the condition of extending the repayment deadline for their liabilities in April.
Having already been granted the temporary injunction, RBS wants the High Court to quash Hicks' bid to replace managing director Christian Purslow and commercial director Ian Ayre with his son and a member of his Texas staff, claiming it was "in breach of those contractual undertakings" at the time of the refinancing.
"Among other things, that interim injunction prevents Mr. Hicks or Mr. Gillett taking any steps to remove or replace Mr. Broughton from his position as chairman of the board of the Kop (holding) companies or from taking any other steps to appoint or remove any directors
from the board of the Kop companies," RBS said in a statement.
"The proceedings tomorrow represent the continuation of Friday's proceedings and relates to breach of contract only. These proceedings do not represent steps by RBS to enforce its security or to appoint an administrator."
But separate legal action may be required by Broughton to assert his legal power to sell the club.
If Liverpool was to go into administration, Lim hopes to outmaneuver the Boston bidders with an improved offer. Lim claims that he had designated preferred bidder status before being told by text message last week that the Red Sox bid offer had been accepted, one of the people with knowledge of the situation said.
Lim, who was ranked 655th on Forbes magazine's list of global billionaires in March with a net worth of $1.5 billion, would fund the deal with his own resources without borrowing any significant sums, the person said. The NESV bid has 17 investors behind it. Despite approving NESV's bid, the Premier League is still carrying out the same checks into the suitability of Lim to run Liverpool.
First Published: Oct 12, 2010 08:44 IST