LIVERPOOL’S FATE will be decided by a high-court judge this morning after a dramatic day of evidence on which two rival offers emerged to the one that has been accepted by the club’s board.
As lawyers for the current co-owners, Tom Hicks and George Gillett, argued against those representing the club and its principal lender, the Royal Bank of Scotland, inside court and fans demonstrated outside, it also emerged that the Singaporean billionaire Peter Lim had made an improved offer that was instantly relayed to the court. It is worth €363 million in cash, plus €45 million for transfers.
Mill Financial, the US hedge fund understood to have assumed control of Gillett’s stake in the club after he defaulted on a loan, was also said to be interested in buying the club and was said to have offered to clear Liverpool’s debts and commit up to €113 million to building a new stadium.
Hicks and Gillett had launched a counter-claim against the Liverpool board and RBS in an attempt to slow down the process and postpone the club’s proposed €340 million sale to New England Sports Ventures, the owners of the Boston Red Sox.
After a full day of sometimes spiky exchanges and dense legal argument Mr Justice Floyd told a packed courtroom that he would return this morning to deliver his verdict. RBS and Liverpool’s independent chairman, Martin Broughton, who was brought in by the bank to oversee the sale of the club, are confident that their claim for breach of contract will succeed. The bank is seeking a ruling that Hicks and Gillett breached a contract that was signed when they refinanced in April, giving Broughton the power to appoint the board and effective control of the sale process.
In giving evidence Hicks admitted for the first time that the undertakings given to RBS were breached when he and Gillett attempted to dissolve the board and reconstitute it with directors favourable to their cause. However his QC, Paul Girolami, argued that they had no choice because they had been frozen out of the sale process by Broughton, the chief executive, Christian Purslow, and the commercial director, Ian Ayre.
Richard Snowden QC, representing RBS, accused Hicks of “breathtaking arrogance” and said that it was “as clear a breach of contract as you will ever see”. He repeatedly tried to return to the nub of the claim – RBS’s insistence that the breach of contract should be reversed and the club’s board reconstituted, to allow the sale to proceed. Hicks, in his evidence, suggested that the “English directors”, who he said secretly referred to themselves as the “home team”, had kept information from Gillett and himself and rushed through a sale to NESV when other parties would pay more.
He said: “What has happened is that the English directors have gone forward with the NESV bid without properly considering alternatives when those alternatives at least appear to give better prospects.”
The suggestion that Hicks and Gillett were frozen out was rubbished by Lord Grabiner QC, acting for the club, and Snowden. The “home team” reference was merely shorthand for the board in sale negotiations, they said.
Philip Marshall QC, acting for the club on company law issues, said the board had narrowed down a field of 130 inquiries – from which 27 firm expressions of interest had arisen – with the advice of Barclays Capital and had accepted the best offer.
Lim’s public release of a letter sent to the Liverpool board, as court proceedings began, could be seen to aid the argument of Hicks and Gillett. “I believe that, if its massive debt burden can be removed, the club would be able to focus on improving its performance on the pitch,” said Lim. “If the board accepts this offer, the monies are available immediately thereby removing the threat of administration.”
It was also confirmed for the first time that RBS is owed 75 per cent of the outstanding €269 million loan and the rest is owed to Wells Fargo. There is also at least €45 million in fees outstanding. RBS argued that a speedy judgment was crucial because the loans are due to be repaid on Friday. Girolami argued that the threat of administration was an empty one because the bank had other instruments at its disposal.
NESV has until November 1st to complete its deal. RBS said it wanted a return on its loan and it was up to Liverpool whether it reactivated the auction process. Lawyers for NESV said in court it would seek damages if the deal fell apart.
The club is seeking its own declaratory judgment to allow the sale to proceed, which it launched on Monday night. This could become superfluous if the decision goes the way of RBS today.
- Guardian Service
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