Bankers dismiss fears over Liverpool debt
Liverpool's bankers Royal Bank of Scotland have dismissed fears about the future of the club by stressing they are "financially healthy and able to service comfortably its debt".
American owners Tom Hicks and George Gillett are currently in negotiations to refinance the £350m loan they took out to buy the Reds two years ago, with less than a month to go until the deadline for an agreement.
A deal is believed to be close and despite speculation about potential financial meltdown at Anfield RBS, who have taken the unprecedented step of writing to fans to explain the situation, are happy to give their full support to the Merseysiders.
According to the Liverpool Daily Post the bank has stressed they have a "long-term relationship with the club, and we look forward to this continuing for many years to come".
"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.
"It is in our commercial interest to support the club . . . so that it can continue to perform successfully on and off the pitch."
Hicks and Gillett currently pay around £35m a year in interest on their loan and recently auditors KPMG went public with their concern over the level of debt being incurred by Kop Football Holdings, Liverpool's parent company, after it posted losses of £42.6m in the year ending July 2008.
That was in contrast to the football club business itself, which made a profit of £10.2m.
The bank have dismissed concerns about the potential fragility of Liverpool's finances, stressing there is a clear dividing line between what the club owes them and what debt Hicks and Gillett have taken on.
"RBS is the main banker to the club including all of its operating accounts, cash management, online banking, automated payments, and credit card processing to facilitate ticket sales and retail merchandising," stated the email, according to the Daily Post.
"We also lent money to the club's parent, Kop Football Limited, so that it could repay debt which was on the balance sheet of the club at the time of its acquisition by George Gillett and Tom Hicks.
"This is the only portion of Kop Football's bank debt for which the club is legally responsible.
"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, primarily those outlined above, 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."
Gillett has already struck a deal to sell ice hockey team the Montreal Canadiens for around £330m.
It is expected he will use some of the proceeds from that as a personal guarantee, which will help in the refinancing negotiations as RBS and Wachovia, the other bank involved, are likely to ask for more stringent conditions.
Hicks is also trying to realise more capital by offloading about half of his 95% stake in the Texas Rangers baseball team, which could raise around £125m.
Yesterday American billionaire Robert Kraft, owner of American Football franchise New England Patriots and MLS side New England Revolution, admitted he was very close to buying Liverpool before Hicks and Gillett became involved.
"I met with [the then chairman] David Moores, who is a fine gentleman, and we came very close to buying it, very close," he said.
"But in the end my instinct was - without a salary cap, or a stadium... I wasn't sure how we'd get a stadium built quickly and efficiently.
"If the salary cap was there, we would have done it."
Latest in Sport
Manchester United transfer news: Louis van Gaal offloads fringe players as he looks to the long term
Loic Remy joins Chelsea: Striker adds artillery to Diego Costa's firepower
Leicester vs Arsenal player ratings: Who was the star man? Wes Morgan? Leonard Ulloa? Alexis Sanchez?
Tottenham to offer Andros Townsend to Southampton in £14m deadline day bid for Jay Rodriguez
Tottenham vs Liverpool player ratings: Who was the star man? Raheem Sterling? Alberto Moreno? Or new-boy Mario Balotelli?
- 1 Unseen Charlie and the Chocolate Factory chapter deemed 'too subversive' released
- 3 Joan Rivers: 'Palestinians deserve to be dead'
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward