Investment firm Rhone Group make offer to cut Liverpool FC's debts
Mar 14 2010
liverpoolecho.co.uk
Tom Hicks and George Gillett have been offered a way of relieving the financial pressure at Liverpool after global investment firm the Rhone Group made a £100million-plus offer for a 40% stake in the club.
Liverpool’s co-owners have been looking for an injection of cash to help reduce the current level of debt leveraged on the club.
When they successfully renegotiated the terms of their loan with the Royal Bank of Scotland last summer one requirement was that they had to cut £100million off the £237million debt.
Liverpool chief executive Christian Purslow set a deadline of Easter to have secured new finance.
After much speculation over the source of potential investors, it is understood the submission from the Rhone Group is the first genuine offer to be received.
If the offer is accepted by Hicks and Gillett it would considerably strengthen the club’s financial position.
The people behind the Rhone Group bid have been keen to stress that the offer comes in the form of fresh money - not borrowed - which would immediately be used to slash Liverpool’s debt by nearly half.
That would have the effect of immediately making the Merseysiders a more attractive option for outside investment.
It would also dramatically reduce the £30million a year interest payments to service the debt and improve the club’s appeal to lenders, which could, in turn, lead to cash being secured to finally begin work on the long-awaited new stadium in Stanley Park.
If successful the Rhone Group’s bid would give them the controlling interest in the club, with Hicks and Gillett reducing their shareholding to 30% each.
Details of the offer were only received by Liverpool yesterday and the matter has yet to be discussed at board level.
There have been suggestions today that the American co-owners are looking for a better price but with the clock ticking on the time they have to meets RBS’ requirements it may yet prove to be a viable option.
Founded in 1995, the Rhone Group have their headquarters in New York, although sources close to the bid have assured Liverpool fans vehemently opposed to Hicks and Gillett that this should not be seen in any way as another American investment.
The group have other offices in London and Paris, where one of its two owners Robert Agostinelli currently lives, and are considered a global company rather than solely US-based.
Sources also tried to reassure fans concerned about a private equity company buying into the club by stating Rhone have a reputation for being conservative investors and are not short-term opportunists.
WHO ARE THE RHONE GROUP?
Founded in 1995, the group are headed by Robert Agostinelli and Steven Langman who, contrary to reports, are not American billionaires but just very wealthy financiers. Although their headquarters are in New York, the group also have offices in London and Paris and describes itself as “one of the world’s leading mid-market private equity firms.”
WHAT IS THEIR PLAN?
To buy a controlling interest - 40% - in Liverpool at a cost of £100million-plus. The money would be in the form of a cash payment which would not place any further debt on the club and would, in fact, reduce Liverpool’s £237million liabilities by nearly half.
WHY LIVERPOOL?
Despite their on-field problems this season, Liverpool remain a globally-recognised brand with endless marketing opportunities. In spite of their huge debt, the club made a profit last year and if the Rhone Group’s investment helps hurry along a new 60,000-seater stadium another huge income stream will be opened up.
HOW WOULD THEY RUN THE CLUB?
It is not entirely clear at the moment, but, considering the lack of investment by current co-owners Tom Hicks and George Gillett, they could not do much worse. However, with a potential 40-30-30 split of shares it may make decision-making even more complicated. Despite the truce between Hicks and Gillett it seems unlikely they would side with each other in the boardroom.
DO THEY HAVE SUPPORT?
The reaction has been mixed in fans forums. Many are wary of another American investor - although the company have been keen to stress they are a global operation and not US-based - and the words “private equity” are never likely to be welcomed by football fans who think with their hearts and not their heads. On the flip side, so desperate are supporters for investment to catch up with Chelsea, Arsenal, Manchester United and Manchester City, that anyone who can bring money to the table is seen by many as a saviour.
WHAT CHANCE DOES THE BID HAVE OF SUCCEEDING?
It will all come down to whether Hicks and Gillett are willing to accept the price and the loss of a controlling interest. Murmurings from the Hicks camp have already suggested the Texan feels the offer is on the low side. However, the co-owners have an obligation to Royal Bank of Scotland to slice £100million off their debt by the summer and, if no other bids are forthcoming, then Rhone Group’s offer may be their only option.
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