Thomas O Hicks and George Gillett Jr, the two American
businessmen who are close to completing their takeover of
Liverpool, have borrowed almost £300m from the Royal Bank of
Scotland to finance the deal. The bank has loaned the money at 1.5%
above the current standard lending rate, meaning that about £21.5m
interest will be payable this year.
The debt is not being taken on by the club in the way the Glazer
family loaded Manchester United with £660m borrowings from their
2005 takeover, but professionals close to the deal said it was
nevertheless likely that Liverpool would pay the interest, or pay
Hicks and Gillett "a big dividend" at the end of the year to enable
them to do so.
The terms of the loans are in the offer document sent to all
shareholders, revealing that the two men are borrowing £185m to pay
for the £174m takeover itself and associated costs, with another
£113m available as a "revolving credit facility" to absorb
Liverpool's debts and fund the club and preliminary work on the new
60,000-seat stadium. A further £200m will be borrowed to build the
stadium but the way that will be done has not been worked out. The
initial £298m loans are guaranteed by Hicks and Gillett
personally.
The offer document also reveals how stretched Liverpool became
financially last year as the chief executive, Rick Parry, searched
for someone to take over the club. In August the then chairman
David Moores lent the club £10m - £2m personally and £8m from a
family trust - to let the manager, Rafael Benítez, have some money
to strengthen the squad, which he spent on buying the striker Dirk
Kuyt.
Parry said that with a takeover likely the club had not wanted to
take on more bank finance. "We were at the limit in terms of our
short-term borrowing facilities and were racking up expenditure
keeping the stadium on schedule, so it was a fantastic gesture by
David to make that money available." Along with the money Hicks and
Gillett are paying for his shares, Moores will have his loans
repaid in full.
The takeover is certain to go through after it was confirmed last
week that over 80% of Liverpool shareholders had accepted the offer
of £5,000 a share. Moores, the former 51.5% shareholder, will be
paid £89.615m for the 17,923 shares he bought for about £12m.
Robert Tilliss, the New York-based financial adviser to Hicks and
Gillett, said the men had been attracted by buying "one of the
leading brands in the world's No1 sport". He said they would bring
their sports business expertise over from the US, where $20bn
(£10.3bn) has been spent in recent years upgrading stadiums whose
ticket prices make those in the Premiership seem like a snip.
Tilliss said the popularity of English football in Asia had also
been a factor. "All clubs in the US continue to drive on
international, national and local revenues, and the great brands of
English football certainly have room to develop."
Hicks and Gillett, who have said they intend to be "custodians" and
hold Liverpool as a family asset, will own the club via a company
structure based in the tax havens of the Cayman Islands and the US
state of Delaware. The ultimate holding company, Kop Investment
LLC, is registered in Delaware, which has low corporation tax and
no capital gains tax, and its principal office is at Hicks's
corporate headquarters in Dallas, Texas. One professional involved
with the deal said that this did not mean the two men foresaw a
sale or flotation and were "sheltering" those future gains from
tax, but that it was simply "a tax efficient" way to structure the
deal.