Liverpool board rebuff Morgan's £73m proposal

Liverpool last night dismissed Steve Morgan's proposal to invest £73m in the club as "not attractive," apparently leaving the Thailand prime minister, Thaksin Shinawatra, back in pole position as an investment partner.

Although a statement by the board said that the club would talk to both parties about their offers, the rebuttal of Morgan's proposals is a major setback for him. The club made its announcement after the board had met to discuss rivals offers from Morgan - via his company, Bridgemere Investments - and from Thaksin.

"The Board notes that the Bridgemere Proposal, at £1,750 per share, implies a current value of £61m for the entire club, which is a substantial discount to the value placed on the club by the board," the club said in a statement. "The board has therefore concluded that the Bridgemere Proposal as currently constituted is not attractive. It intends to discuss its response to both these proposals with the respective parties."

What Morgan proposed was a one-for-one rights issue, meaning that every current shareholder would be offered one new share for each one they own, at £1,750 each. There are around 35,000 shares at the moment. If everyone bought their full entitlement, the club would raise new funds of £61m. The club, post-issue, would be worth £122m.

Morgan's company would underwrite the issue, meaning that if any current shareholders did not buy their one-for-one entitlement, he would guarantee to buy it instead. Therefore his pledge of £61m was the maximum he would invest if no other shareholders bought their entitlement. But if he did invest that much, it would give him more than half the shares in the expanded holding.

The only way that the other current shareholders would be able to hold on to their percentage stakes in the club would be to buy their entitlement of the issue. For the club's chairman, David Moores, for example, this would mean injecting new funds of some £32m to remain the 51 per cent majority shareholder.

In addition to the one-for-one rights issue, Morgan also proposed to underwrite the issue of £12m of new shares, marketed at fans.

Thaksin's proposal, to buy 30 per cent of the club for around £60m, puts a current value on the club of £200m, which is evidently more attractive for the board. Accepting his offer would provide funding without any current shareholders having to delve into their own pockets.

The board made their announcement as public support swung towards Morgan and Gérard Houllier issued a staunch defence of his management record at Liverpool.

Morgan has a Mersey tide of public opinion behind him, with 87 per cent of respondents to a Liverpool Echo poll choosing Morgan over Thaksin as the benefactor of choice.

Houllier did not address the subject of Morgan or Thaksin yesterday, preferring instead to explain why qualifying for next season's Champions' League had been a "massive achievement" for Liverpool "considering the circumstances".

"We have made progress because last season we finished fifth," Houllier said. "My feeling is one of pride for my players who have their dignity and faith during a difficult season in which I have been constantly under fire."