Hicks / Gillett Suffer Massive Liverpool Losses
Written By: dunny|
Jun 4, 2009
Liverpool’s American Co – Owners George Gillett and Tom Hicks can’t be happy knowing their Kop Football (Holdings) Limited lost over 42.6 Million Pounds in the last year during their attempt to re – finance the 350 Million Pound ownership debt.
The grim forecast from the club’s accountants, KPMG LLP, came despite Liverpool posting a record turnover of £159.1m for the year ending July 2008 and a profit of £10.2m, and relates to the co-owners’ attempts to refinance a £350m debt before a 24 July deadline. The current uncertainty, claim KPMG, “may cast significant doubt on the group’s and parent company’s ability to continue as a going concern”. A source close to Hicks, however, described the Texan as “very relaxed” about the accounts and “confident” with how talks on the latest refinancing package are proceeding.
Kop Football’s losses are due mainly to the interest payments on the debt incurred to enable Hicks and Gillett to buy Liverpool in February 2007. Although the Americans are progressing with a refinancing deal – they recently met Royal Bank of Scotland officials to discuss an initial six-month extension to the July deadline – the annual accounts show how much money is draining out of the club to service the costs of the parent company’s loans. Interest payments accounted for £36.5m of Kop’s losses, with the company also spending millions on preparation work for a proposed new stadium that is yet to get off the ground.
In their notes in the accounts, KPMG state: “The group has credit facilities amounting to £350m which expire on 24 July 2009. The directors have initiated negotiations to secure the replacement finance required … and these negotiations are ongoing. These conditions … indicate the existence of a material uncertainty which may cast significant doubt on the group’s and parent company’s ability to continue as a going concern.”
Hicks and Gillett are believed to be close to finalising a refinancing deal with the RBS, but it is dependent on both increasing their personal guarantees on the debt. The pair are in the process of selling various assets in the United States with this aim in mind and believe the promise of significant extra revenue from the new stadium will reassure the banks. Extending the refinancing deal will also enable the pair to continue setting their valuation on Liverpool to any prospective investors.
Creditors of Hicks earlier this year declared his company, Hicks Sports Group, had defaulted on debts of $525m (£325m), money raised against his US sports franchises, the Dallas Stars ice hockey team and baseball’s Texas Rangers. Hicks was served with a default notice after missing a $10m quarterly interest payment, but insisted the decision to miss the payment was a negotiating tactic with his bankers.
Image via Telegraph
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