• US group proposes to invest £110m to cut debt
• Holdings of Tom Hicks and George Gillett would be diluted
Liverpool have received what they consider the first serious offer to buy into the club after it was revealed that they are ready to open talks with the Rhône Group, a firm of multi-million pound fund managers.
The group, which is based in New York and has offices in both London and Paris, is proposing to invest £110m directly in Liverpool, which would settle a little under half of the club’s debt. Rhône will be issued new shares in the club in return, diluting the current 50% stakes of Liverpool’s co-owners, Tom Hicks and George Gillett.
The size of the equity stake which Rhône would be issued will become a matter for negotiation. It is believed the starting point for those talks will be for the co-owners’ stakes to be reduced to 30% each, with Rhône taking the remaining 40%.
The offer was received by Liverpool on Saturday and the matter has yet to be discussed at board level, though early indications are that the directors will consider it a sound first proposal. Liverpool’s board, and the co-owners, will hope Rhône’s bid encourages other viable bidders to come through with firm proposals.
It is thought that Gillett and Hicks are likely to consider that the valuation the Rhône group is putting on the club does not meet their aspiration to make a sizeable profit from their three years in control of Liverpool. It is understood the pair value the club’s equity at more than £300m. The Rhône deal would value Liverpool’s shares at £275m which Hicks, in particular, may not regard as an adequate figure. By contrast, there is talk of a £1.5bn offer for Manchester United from the Red Knights group of investors.
A further obstacle may be the lack of money going into the pockets of Hicks and Gillett. The Rhône deal involves paying off debt only and the current co-owners would, as a result, see their shareholdings in the club diluted.
However, with time running out for Liverpool in an ever more competitive race for a place in next season’s Champions League, a competition worth a minimum of £10m a year in direct revenues alone, there is an urgent need to secure fresh funding. Liverpool will hope that Rhône’s interest will flush out other potential investors and, either way, the club’s chances of raising more funds will be improved by the reduction in its debt.
Hicks and Gillett have been told by the Royal Bank of Scotland, as part of the refinancing package they agreed last year, that they have to reduce Liverpool’s £237m debt by at least £100m this summer and to that end their chief executive, Christian Purslow, has been working to find outside investors.
The Rhône group is the first to have sensed a chance to capitalise on Liverpool’s distress. At a time when US investors are increasingly looking to the English leagues for stakes in clubs, Rhône, a mid-size global investment business, would be looking for a long-term stake in the club. Although it would not have control of Liverpool’s affairs, it would break the 50-50 voting share Hicks and Gillett hold, which at times of disagreement between the owners is prone to cause stalemate.
Rhône’s proposal would also improve the club’s credit-worthiness which could, in turn, lead to finance being secured to finally begin work on the long-awaited new stadium in Stanley Park. The Rhône Group, established in 1997, says it specialises “in mergers and acquisitions, leveraged buyouts, recapitalisation and partnerships with particular focus on European and trans- Atlantic investments. It is a private company which has been owned and managed by Robert F Agostinelli and M Steven Langman since inception.”
Agostinelli helped build up Goldman Sachs’ mergers and acquisitions business in London, then became a Lazard partner in 1987 before leaving to start the Rhône Group. Langman also worked at Lazard.
Premier LeagueLiverpoolBusinessMatt ScottDavid Connguardian.co.uk
