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Bank backs Reds duo
Liverpool's besieged owners recieve timely support from their financiers.
Last Modified: 26 Jun 2009 19:06 GMT

American businessmen George Gillett, left, and Tom Hicks remain in charge at Anfield [AFP]
The Royal Bank of Scotland has reassured Liverpool supporters about the club's financial health, in the strongest indication yet that the team owners' loans will be refinanced before next month's payment deadline.

RBS pledged to continue backing Liverpool owners Tom Hicks and George Gillett Jr. in an e-mail to those supporters who have been urging the bank not to extend the $578 million credit facility secured with RBS and Wachovia in the United States.

RBS is Britain's biggest government-controlled bank as a result of an industry bailout last year.

Some fans' groups had hoped that since taxpayers had effectively bailed out RBS, they could persuade the bank to pull the plug on the owners' loans, originally refinanced in January 2008, and force them to sell the Premier League club they bought in February 2007.

Confidence

But while RBS spokesman Roger Lowry acknowledged the concerns and "strength of feeling'' among fans, he insisted that the bank has confidence in Hicks and Gillett, a positive endorsement ahead of the July 24 refinancing deadline.

"In our view and that of the executive management of the club, it is financially healthy and able to service comfortably its debt obligations from cash flow generated by its playing and commercial activities,'' Lowry, head of group public affairs at RBS, said via a statement.

"It is in our commercial interest to support the club ... so that it can continue to perform successfully on and off the pitch. As far as the government is concerned, they have been very clear that they do not wish to exercise day to day control over RBS or make commercial decisions for us.''

Hicks and Gillett, who are on the verge of securing an extension on new terms for the facility, insist that the actual debt is not as high as the $578 million often quoted but closer to $413 million.

The extent of Liverpool's debt is also addressed by Lowry of RBS.

"The club does not suffer the burden of debt implied by a lot of the recent press reports,'' Lowry said.

Credit

RBS is Liverpool's main banker, handling most aspects of the business, crucially providing credit for transfers. That enabled the Reds to break their transfer record two years ago to sign Fernando Torres for a then $40.6 million from Atletico Madrid.

"We have set out to establish a long term relationship with the club, and we look forward to this continuing for many years to come,'' Lowry said.

Liverpool's accountants KPMG had stated in the club's 2007-08 accounts that its debts "may cast significant doubt on the group's and parent company's ability to continue as a going concern.''

But Lowry responded: "We took great care when making our original loan in early 2007 and when refinancing it last January to distinguish between obligations of the club ... and obligations of its parent company, the latter being secured by personal guarantees and collateral from the owners and a pledge of the shares they own in the club.''

Hicks is still searching for new investors to help fund a 60,000-seat stadium to replace Anfield and is confident of completing a deal by the end of 2009.

Both Hicks and Gillett have been shoring up their financial positions in North America.

Hicks is willing to give up control of Major League Baseball team Texas Rangers if the right deal comes along, but intends to keep the National Hockey League's Dallas Stars.

The holding company that owns the teams recently defaulted on about $525 million in loans, though Hicks said that was an intentional move to help his negotiations with banks.

Gillett announced at the weekend that he was selling the Montreal Canadiens ice hockey team back to the Molson family.

Source:
Agencies
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