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Posts Tagged ‘hicks’

• Email comment emerges in court bid to block Hicks and Gillett
• Liverpool’s then managing director unconvinced by NESV

Christian Purslow, Liverpool’s former managing director, described New England Sports Ventures’ original offer to buy the club as a “bottom of the barrel” deal, it has been revealed in court. In an email sent to fellow directors only a month before NESV bought Liverpool for £300m, Purslow, who left the club within days of the takeover, cast doubt on the group’s ability to pay off the debt built up by the then owners, Tom Hicks and George Gillett, to build a new stadium and to invest in the squad. The only positive, he wrote, was that NESV “existed”.

Purslow’s email emerged at the high court where NESV, the former Liverpool chairman Martin Broughton and the Royal Bank of Scotland are seeking to extend indefinitely an injunction that prevents Hicks and Gillett suing for damages abroad. Hicks called October’s £300m deal “an epic swindle” at the time and launched a $1.6bn lawsuit in Dallas in an attempt to halt the sale. RBS, Broughton, and NESV responded with an injunction that Hicks and Gillett want removed in order to pursue a legal claim in the United States.

Liverpool’s owners, now called Fenway Sports Group, eliminated all of the acquisition debt placed on the club by Hicks and Gillett when they completed their takeover on 15 October last year. Plans for a new stadium, however, are under review with John W Henry and Tom Werner, the principal owner and the chairman respectively, considering a redevelopment of Anfield. The owners also spent £57.8m to sign Andy Carroll and Luis Suárez in the January transfer window, although that was offset by the £56m sales of Fernando Torres and Ryan Babel.

In the email sent to his fellow directors Broughton, Ian Ayre and Philip Nash on 15 September 2010, Purslow wrote: “To get it straight, I think we should avoid the natural temptation to jump straight in to the deal with NESV. Whilst they are charming, intelligent and credible their bid is by any standards at the extreme bottom end of the ‘right deal’ threshold we set for ourselves: it only reduces debt by less than half and is I feel unlikely to yield incremental equity to fund a stadium.

“They may say they have money if necessary but I do not take this very seriously. Their eyes only lit up at the idea of other opportunity improvements. An American deal guy simply can’t avoid using other people’s money if they can.

“There is no extra money on the table to enable short-term investment in what remains a squad palpably needing more quality if we are to be definitively top four. New American sport team owners with the senior guy being a hedge fund manager could not be worst [sic] from an image standpoint, which is an issue for us independents. I have not even talked about valuation. I leave that to other members of the board. So what is positive? Answer, they exist. Which is not a lot, but it is not to be underestimated in importance.”

Purslow added that the board should “double check that none of the possibles who have come and gone in the last 18 months to apparent levels lower than Sharjah but higher than NESV are not there. So I repeat this is a bottom of the barrel outcome.”

The email is one of 75,000 that allegedly refer to the sale process, with the Sharjah reference believed to be that of an earlier £600m offer from the Middle East. The case continues.

LiverpoolJohn W HenryAndy Hunterguardian.co.uk

• Liverpool say they are insulated from any lawsuit
• Former owners believe the takeover was a ’swindle’

Liverpool’s former owners, Tom Hicks and George Gillett, have tonight dropped a lawsuit filed just hours earlier claiming up to $1.6bn in damages over the contentious sale of the club, but said they could yet return to the British or American law courts.

Liverpool yesterday said the club would be insulated from the effects of any lawsuit, which would have to be aimed at the named directors of the holding company that was dissolved yesterday once the deal went through, or at the Royal Bank of Scotland.

After losing their battle to hold on to Liverpool FC, the attorney Tom Melsheimer said that Hicks and Gillett were dropping the claim in order to comply with this week’s high court order.

But he said “a different picture will be painted” when the English court “has a chance to hear all the facts”, indicating that the duo are prepared to fight on in their belief that the club’s directors and its principal lender, RBS, conspired against the pair to sell the club for less than its true market value to New England Sports Ventures.

They have reserved the right to pursue their case in the UK or the US at a later date, with some legal experts believing they could yet have a case, while questioning the size of the claim.

“If they can prove that the club was sold for less than its worth then they have a strong case. Proving the value of the club is intrinsically difficult. It is a particular expertise and difficult to accurately quantify,” Danny Davis, a partner and football finance expert at Mishcon de Reya, said.

“The $1.6bn they are seeking will, however, be significantly reduced to something more in line with the actual difference in sale price and value, if they can prove it. Having mismanaged the situation legally won’t help their chances either.”

The decision to withdraw the claim came about two hours after the £300m sale of the club to the owners of the Boston Red Sox was finalised in London. That came after Hicks and Gillett dropped a temporary restraining order blocking the sale that had been obtained in a Texas court.

But even as they dropped the petition on the orders of a high court judge – who said the case had little to do with Texas and ruled they had failed to disclose the fact that they had recently lost a similar action in a UK court – Hicks and Gillett launched one final assault on the chairman, Martin Broughton, and the sale process.

“It’s an extraordinary swindle and it will result in exactly the wrong thing for the club and the fans,” said attorneys acting for the pair. “This outcome not only devalues the club but it also will result in long-term uncertainty for the fans, players and everyone who loves this sport because all legal recourses will be pursued,” Steve Stodghill, the Texas attorney representing the former owners, said.

Hicks, who failed in a last-ditch bid to transfer his share of the club to the investment fund Mill Financial and so derail the sale, said: “This was a conspiracy of the British establishment, Royal Bank of Scotland, our chairman [Martin Broughton] and our highly compensated employees.”

Following the completion of the sale, Liverpool moved to reassure supporters that the club would not be liable for any further legal claims.

“If Hicks and Gillett pursue the legal route it would be an action against the English directors of Kop Holdings [which has now been dissolved] and/or RBS. There is no exposure for Liverpool FC,” said a spokesman.

Tom HicksLiverpoolBusinessJohn W HenryOwen Gibsonguardian.co.uk

• Hicks and Gillett claim they have injunction to halt sale
• Board hold late talks with NESV’s John W Henry

Tom Hicks and George Gillett last night tried to derail Liverpool’s sale to the owners of the Boston Red Sox by obtaining a temporary injunction in a Dallas court, claiming $1.6bn (£1bn) in damages and calling it an “epic swindle”. The club immediately responded by vowing to overturn the “unwarranted and damaging” order as talks with New England Joint Ventures continued into the early hours after yesterday’s resounding victory in the high court.

As Liverpool’s reconstituted board met with NESV, on the verge of a deal to buy the club for £300m and bring the tenure of Hicks and Gillett to a close, the duo launched a desperate bid to reopen the sale process. The restraining order appears to prevent a sale taking place before the hearing on 25 October. Now the boards of Kop Football and Kop Holdings accept they must fight to have it removed in order to proceed with the sale to NESV.

A statement on the Liverpool website read: “The independent directors consider the restraining order to be unwarranted and damaging and will move as swiftly as possible to seek to have it removed.”

The news of the restraining order came in a statement posted on the website of the American law firm Fish & Richardson. The Texas District State Court petition accuses the chairman, Martin Broughton, appointed by the creditors Royal Bank of Scotland in April to oversee the sale of the club, and his fellow directors of acting as “pawns” of RBS to perpetrate an “epic swindle” in selling the club to NESV for less than half its supposed market value and ignoring several higher offers.

It accuses the independent directors and RBS of trying to “prevent any transaction that would permit messrs Hicks and Gillett to recover any of their initial investment in the club, much less share in the substantial appreciation in the value of Liverpool FC that their investments have created”. Also it claims that RBS acted in a “grand conspiracy”.

They stand to lose more than £101m in loans they made to the club if the sale to NESV goes through and will now also have to pay legal costs estimated at between £250,000 and £500,000.

As stated in the high court this week, and accepted by the judge, Broughton led an extensive sale process that whittled down 130 expressions of interest to two serious offers. But Hicks and Gillett claim he was guilty of rejecting a number of higher offers, including one from FBR Capital Markets for between £375m and £400m and leaking details to the media to undermine their attempts to refinance.

The claim will be greeted with fury by fans who earlier in the day were celebrating a high court judgment that found in favour of RBS, owed the majority of a £237m loan due for repayment tomorrow, and ordering the Liverpool board to be reconstituted so the sale to NESV could proceed.

Even as their board meeting continued in central London late into the night, Liverpool resolved to complete the sale to NESV, whose principal founder, John W Henry, was present. It is understood that Hicks’ lawyers believe that RBS directors, Broughton and the other Liverpool directors will not want to risk being in contempt of a US district court by contravening the order, given their extensive interests in the country. The petition also points out that Broughton held meetings with Hicks in Texas.

Mr Justice Floyd had earlier upheld the claim by RBS for breach of contract against Hicks and Gillett after they attempted to block the sale last week by dissolving the board, contravening an agreement signed as a condition of refinancing last April that also led to the appointment of Broughton. The QC representing Hicks and Gillett had said in court that the pair accepted their time as owners of Liverpool had come to an end, but that they believed the club was worth more than it was being sold for.

Ruling that their actions in seeking to block the deal represented “the clearest possible breach” of a corporate governance agreement signed with RBS in April as a condition of refinancing, Mr Justice Floyd ordered Hicks and Gillett to allow the club’s board to be reconstituted in its original form by 8pm last night.

NESV yesterday reiterated that it had a “binding agreement” and was ready to “move quickly” to complete. It has promised to provide £200m to clear the existing acquisition debt and another £100m in working capital. But the Boston Red Sox owner is also named in the complaint. Tom Werner, NESV’s chairman who has a background as a senior US media executive, was also yesterday flying to the UK in the hope of concluding the deal.

But the added delay could also bring the spectre of administration back into the equation and the possibility of a nine-point penalty being imposed by the Premier League. The court date of 25 October is almost a week after the RBS loans are due.

LiverpoolOwen Gibsonguardian.co.uk