Liverpool pass on Rhone bid
Debt repayment deadline looms as bid of £110m is rejected by club's owners
Tuesday 06 April 2010
A bid of £110m by New York-based fund management company Rhone Group to take a controlling share in Liverpool appeared effectively to have been rejected last night, with no sense that the club wished to pursue it ahead of a midnight deadline.
The Independent revealed last month that Rhone's offer had a three-week deadline attached and subject to an 11th-hour turnaround in discussions, it has lapsed. Though Rhone's investment is needed to pay down £100m of debt demanded of the club by Liverpool's bankers, Royal Bank of Scotland, the club seem to believe they can secure a better deal elsewhere.
It does not seem that Rhone will go back to the club in the future and though further negotiations are possible if Liverpool re-establish contact, the valuation may have changed if Rafael Benitez's side are not playing Champions League football next season. Qualification brings an additional £20m annual revenue.
Investment community analysts believe that Liverpool hoped the interest of Rhone, who have been unwilling to discuss their bid, might have flushed out a better offer. But while two other prospective investors are believed to be in the wings, no alternative bids are on the table at the Easter target date identified by Liverpool managing director, Christian Purslow, for finding a new equity partner.
The sticking point in negotiations with Rhone seems to relate to Liverpool co-owners Tom Hicks and George Gillett's refusal to cede overall control of the club. The owners' preference is to sell a 40 per cent stake in the club, but to combine their respective 30 per cent shares to maintain overall control. Rhone are likely to have wanted concrete assurances written into any deal that this would not happen.
A 100 per cent takeover would solve that problem, though the £500m price initially demanded by Hicks and Gilllett from Dubai International Capital two years ago could be further reduced by non-qualification for the Champions League.
One source with insider knowledge of Liverpool's search for new investors has suggested several are delaying offers while they wait to see if non-qualification drives down the price. "Qualification is not necessarily the best outcome for would-be investors," the source said.
Purslow, who is leading the search for investors, said in February that it was a "requirement" of RBS that £100m be found from new equity partners to pay down a large slice of the debt heaped upon the club by Hicks and Gillett's leveraged buyout. It is unclear when the deadline for that £100m repayment expires though since RBS are not ready to foreclose on the club. The idea of a state-owned bank making such a move a month ahead of a General Election is highly unlikely, so Liverpool seem to have until July when the current debts are refinanced.
Captain Steven Gerrard has cast some doubt on Liverpool's ability to win their remaining five games in pursuit of fourth place. "That's what we said with six games to go," he said. "It's all right saying we'll be all right if we go and win our last five games – we have to go out on to the pitch and win them rather than talk about it. I think it'll go down to the wire."
Latest in Sport
Chelsea vs West Brom: Jose Mourinho says Diego Costa is ready for ‘marathon’ Christmas
Arsenal vs Manchester United: Arsene Wenger insists clash at the Emirates Stadium remains battle of the giants
Cesc Fabregas, Jack Wilshere, Yaya Toure or Steven Gerrard? No, it's Mile Jedinak who is the best midfielder in the Premier League
WWE Survivor Series 2014: Start time and full match card
Manchester United transfer news: Robin van Persie could leave this summer with Edinson Cavani and Thomas Muller on United wish-list
- 1 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 2 Woman opens professional cuddling shop – gets 10,000 customers in first week
- 3 Lana Del Rey rape video: Marilyn Manson denies involvement in shocking leaked footage
- 4 Kenya bus attack: Al-Shabaab militants kill 28 non-Muslims who failed to recite Koran
- 5 Largest ever study into the gay gene 'erodes the notion that sexual orientation is a choice'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
France 'blocks' Russian sailors from boarding a warship
Revealed: How the world gets rich – from privatising British public services
Myleene Klass: Ed Miliband 'strikes back' by comparing UK's need for Labour's mansion tax to Hear'Say track