Liverpool pass on Rhone bid

Debt repayment deadline looms as bid of £110m is rejected by club's owners

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."

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