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Posts Tagged ‘texas’

• Ban stays on Dallas action by former Liverpool owners
• Judge says pair ‘misled’ their own lawyer in Texas

The claims by Liverpool’s former owners, Tom Hicks and George Gillett, that they were “swindled” out of “millions of dollars” when the club was sold in October, will be heard in London, probably next year, following a decision in the high court. The judge, Mr Justice Floyd, maintained a ban on the pair pursuing a court action in Dallas, Texas, where they had argued the sale was “an epic swindle” and “conspiracy” against them.

In his 17-page judgment, Mr Justice Floyd severely criticised Hicks and Gillett for taking their case to Dallas on the same day, 13 October, that they were prevented in the high court in London from blocking the sale. Describing that attempt as “vexatious” and “unconscionable”, the judge said the pair had “misled” their own lawyer in Texas, who in turn misled the Dallas court, about the proceedings in London.

Mr Justice Floyd ruled in October that Liverpool’s former chairman Sir Martin Broughton and two fellow Liverpool directors, Christian Purslow and Ian Ayre, did have the right to sell the club to John Henry’s New England Sports Ventures (now Fenway Sports Group), for the price of repaying the club’s £200m debts to Royal Bank of Scotland. In their claim in Dallas, Hicks and Gillett argued the sale was “an epic swindle at the hands of rogue corporate directors, Broughton, Ayre and Purslow [who] … conspired to sell the iconic Liverpool Football Club … at a price they know to be hundreds of millions of dollars below true market value”.

The high court here responded by awarding those Liverpool directors, RBS and Fenway an “anti-suit injunction”, preventing Hicks and Gillett from proceeding with their claim in Dallas, or anywhere outside England. The former owners sought this month to have that overturned, and to proceed in Dallas, but Mr Justice Floyd upheld it, ruling that any action must take place here, because Hicks and Gillett agreed to that when Broughton was appointed chairman in April 2010.

Detailing their attempt to bring the case in Dallas in October, the judge said Hicks and Gillett had not told their own lawyer in Texas that they had just lost in the English court. Their lawyer also told the Dallas judge that they could not seek their injunction, to block the sale, in London because “the courts were closed”.

That was untrue, said Mr Justice Floyd. He concluded there was “a strong case” that “the former owners decided to withhold information from [their] Texan counsel and from the Texan court, and indeed fed him with incorrect information”. Floyd said he found it “difficult to accept” that the pair were not being “vexatious”, by making that application in Dallas.

“I granted [the anti-suit] injunction on the basis of what appeared to me the unconscionable conduct of the former owners in seeking to undermine the English proceedings,” he said.

The anti-suit injunction was upheld, meaning Hicks’s and Gillett’s version of the Liverpool sale must be heard in London. Broughton and RBS have themselves asked the court to declare that they conducted the sale properly and honestly. RBS is seeking a declaration that it was not part of “an actionable conspiracy”; Broughton that he “is not liable to [Hicks and Gillett] for breach of any duty as a director”.

Representatives here and in the US of Hicks, who has taken the lead in the court proceedings, did not respond to the Guardian’s requests for comment, but Hicks and Gillett are expected to mount arguments in court similar to their blocked Dallas claim. Liverpool sources indicated the case is likely to be finally decided next year.

Liverpool said in a statement: “We are delighted that the anti-suit injunction prohibiting the former owners from commencing legal actions outside the EU has been upheld. Sir Martin, RBS and [Fenway] continue to maintain there is no basis to challenge the propriety or validity of any actions by them in the sale of the club.”

LiverpoolTom HicksBusinessDavid Connguardian.co.uk

• Texan obsessed with Forbes magazine’s valuation of club
• Liverpool board were ready for opposition from Hicks

Martin Broughton, Christian Purslow and Ian Ayre – or the Liverpool Three, as they may soon be christened – always knew Tom Hicks would not go quietly if they decided as directors that the best, solid offers for the club were lower than the payday the Texan had set his mind on.

As his petition makes clear, even before the fevered allegations of “epic swindle” and conspiracies by the three directors and Royal Bank of Scotland, Hicks is obsessed with the valuation put on Liverpool by Forbes magazine. In their list of “Soccer Team valuations” 2010, Forbes make that value $822m (£514m), a figure, Hicks’s lawyers state with his frustration evident, “greatly exceeding Liverpool FC’s outstanding debt”.

That is the core of all his opposition to the deal the three – the proper majority on the board, the high court decided yesterday – agreed with New England Sports Ventures. It would pay off only the £200m Hicks’s and George Gillett’s holding company owes RBS, the cost of buying the club in the first place, and £100m of Liverpool’s other debts. Hicks simply believes it is not enough. His petition says he and Gillett, because of their “substantial efforts to ensure that Liverpool FC’s long, proud and successful history on the pitch will continue”, can get what Forbes reckons they should.

Whether the US finance magazine ever thought the valuations it works up to sell copies would be used quite so authoritatively in a court action in which Hicks is claiming “punitive damages that may exceed $1bn” from the Liverpool three personally, Forbes has not said.

Broughton has consistently argued, as in court yesterday, that of all interest communicated to buy Liverpool, some of which Hicks recites in his petition, only NESV and Peter Lim, the Singapore businessman, produced solid proposals and proof of funds. Some may agree Hicks has a point: Liverpool are surely worth more than £300m and NESV, led by John W Henry, has itself a steal. Broughton’s response, set out in court, is that after an exhaustive worldwide search, these were the best offers, and therefore this is the club’s true value.

The main reason for this lower valuation is the “acquisition debt” Hicks and Gillett borrowed from RBS to buy the club, then made it the club’s responsibility to service. Hicks’s petition nowhere mentions this, that he and Gillett borrowed that money, or that the club has had to pay around £40m interest a year to service it, or even that the money is still owed to RBS. “Messrs Hicks and Gillett have helped to solidify Liverpool FC’s financial position,” the petition says.

Some who have worked for Hicks say he always believes in his own mission, and has a warrior’s belief in taking his fight to the limit. Hicks placed his own baseball team, the Texas Rangers, into administrative bankruptcy last year after his holding company, Hicks Sports Group, defaulted on loans of $525m, which, as with RBS, banks that had lent it readily before the credit crunch decided they wanted back.

So Broughton, Purslow and Ayre were ready for opposition from Hicks – who, rather than Gillett, with whom he has also periodically rowed, is making all the running in this battle. Broughton took consistent, careful legal advice from the club’s solicitor, Slaughter & May, at every step, documenting the extensiveness of the sales process, and all communication with Hicks and Gillett, as directors and shareholders.

Yet even knowing Hicks would do everything he could to defend his position and seek more money, his moves have still shocked with their aggression. Rather than attend last Tuesday week’s board meeting, even by conference call, and argue the club should be securing more than £300m, Hicks attempted the ploy of sacking Purslow and Ayre, and replacing them not with acknowledged expert directors suitable for Liverpool, but his son Mack and Mack’s assistant.

That was when Broughton went on the attack, claiming, on advice from Slaughter & May, yesterday upheld in court, that Hicks and Gillett were committing “flagrant abuses of their undertakings”.

Then in the high court, Hicks’s lawyer, Paul Girolami QC, sought to argue that the “English directors” had ganged up on Hicks and Gillett, and kept them out of discussions, rejecting higher offers for Liverpool, for reasons unexplained.

After Hicks lost that case, and with the sale to NESV about to proceed, Hicks then launched this claim, which says Broughton, Purslow and Ayre did all this – schemed to secure a lower deal for Liverpool – because they were “caving to the demands of Liverpool supporters”, that Broughton “had become a mere puppet of RBS” and that they all indulged in a “grand conspiracy”.

Last night’s injunction, which Liverpool and RBS are seeking to overturn, came as a blow but, on a moment’s reflection, the further resistance from Hicks was not surprising. What jarred, though, was the violence of the language in this legal document, the descriptions – of “defendant Broughton and another unnamed co-conspirator”, the claim of an “epic swindle” – by a man who seems to believe he has brought solid success to Liverpool football club.

The claim reveals the great risks Broughton, Purslow and Ayre have been taking for, whatever Hicks’s petition says about their admittedly handsome bonuses, no huge advantage to themselves. He is suing them personally for “hundreds of millions of dollars in actual damages” and the billion dollar punitive damages. Their home addresses are printed in the petition, and Hicks is threatening them with this ruination, apparently seriously believing they conspired in an “epic swindle” to lose him the profit he thinks he should make on the sale.

As English football acclimatises to overseas ownership of its great clubs, which is still unique in the world game, those who run it should pause to ask a question: Can anybody quite believe that the future of Liverpool football club has been put at risk, and is being fought over, in a district court in Dallas, Texas?

LiverpoolBusinessDavid Connguardian.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