Skip to main content

Liverpool sale saga goes to court on Tuesday

By Gary Morley, CNN
STORY HIGHLIGHTS
  • Tom Hicks and George Gillett will challenge sale to New England Sports Ventures
  • The Americans will lose $130 million on the proposed deal, if it is ratified
  • Liverpool may going into administration if duo cannot repay $377 million loan by Friday

London, England (CNN) -- Liverpool's American owners will contest the English football club's proposed sale in the British High Court on Tuesday, and if they win it could see the five-time European champions put into administration.

Tom Hicks and George Gillett want to block the club's acquisition by New England Sports Ventures (NESV), the owners of baseball's Boston Red Sox, as they feel it does not match their valuation of the club.

Liverpool's board, headed by chairman Martin Broughton -- who was brought in Hicks and Gillett to find a buyer -- agreed to accept a 300 million ($477 million) offer from NESV last week.

However, that would mean Hicks and Gillett face losing $130 million on the deal, having bought the club for 219 million ($348 million) in February 2007.

Their problems have stemmed from the debts they incurred in financing that deal, and the club -- which was saddled with those costs -- may be put into administration if the Americans win the court case and fail to pay off a $377 million loan to Royal Bank of Scotland by Friday.

NESV released a statement late last week promising to keep all acquisition debts away from Liverpool's footballing operations, and stabilize the club in order to return to the glory days which have earned a joint record 18 English titles -- but none since 1990.

But Hicks and Gillett sacked two board members, managing director Christian Purslow and commercial director Ian Ayre, ahead of a meeting last week to discuss the bid. Hicks appointed his son Mack and his associate Lori McCutcheon in their place.

However, Broughton hit back by saying RBS had requested -- when he started the hunt for a buyer in April -- that only he as independent chairman could change board members.

Therefore, Tuesday's court hearing will determine whether the sale can go ahead.The Premier League has already confirmed that NESV's offer satisfies its ownership rules.

If the deal doesn't go ahead, and Hicks and Gillett cannot extend their loan deadline or find new funds to pay it off, then Liverpool will face the prospect of going into administration and a nine-point penalty from the Premier League.

That would put the ailing club -- already in the relegation zone -- bottom of the table on minus three points ahead of Sunday's city derby against Everton.

The owners' chances of a favorable ruling dimmed on Monday when RBS revealed it had won an injunction preventing them from sacking Broughton or any other board members ahead of the hearing -- referring to Gillett and Hicks' efforts last week as "a breach of contractual undertakings."

"Among other things, that interim injunction prevents Mr. Hicks or Mr. Gillett taking any steps to remove or replace Mr. Broughton from his position as chairman of the board of the Kop companies or from taking any other steps to

appoint or remove any directors from the board of the Kop companies," RBS said on Monday.

"The key thing is the court case," Broughton told the Liverpool website last week. "We need to go to the court to get a declaratory judgment, which is for the court to declare that we did act validly in completing the sale agreement, and then the buyers can complete the sale.

"I am confident. I wouldn't have taken the board through that process yesterday if I hadn't been confident."

Liverpool manager Roy Hodgson, who replaced Rafael Benitez in July, has welcomed the proposed takeover.

"It's very positive and of course I'm delighted," he said last week.

"It's been going on a long time and I know how hard the board have worked to set things up.

"I know it's not easy for them because the owners have other ideas in terms of the sale of the club and what is achievable. But I was delighted to hear the news and have it confirmed that it looks like it is going to go through."