Tom Hicks and George Gillett have been granted a six-month period of grace to repay £350.5m to Liverpool's lenders. Those funds, provided last January as "working capital" to run Liverpool and including £60m towards constructing a new stadium, were due to be repaid or refinanced by 25 January. But the banks – the government-owned Royal Bank of Scotland and the US investment bank Wachovia – have deferred the deadline.
That came following a written request from Liverpool's American co-owners and their holding company, Kop Football, with the new deadline now set at 24 July. "The loan does not mature on 24 January," said an insider involved in the deal.
The Anfield club are currently the Premier League leaders but with £30m in annual interest repayments required, the supplementary income from Champions League participation is critical to their business. By July, Liverpool hope, those revenues will be guaranteed.
Although this provides breathing space in the short term, it is unclear how RBS-Wachovia will deal with the loan in the summer. The loan currently earns little more than 5% a year in interest, despite the risk involved with football clubs. City sources expect that even if RBS-Wachovia agree to renegotiate the debt in July they are likely to demand a very large fee, which will further increase Liverpool's indebtedness.
Another imponderable is the financial health of George Gillett's portfolio. Reports in the US say his Nascar team has been scaling back its activities after a drop in sponsorship. His Booth Creek Management Corp is exposed to the ailing automobile industry as the owner of dealerships. Although both Hicks and Gillett regularly stress their continued commitment to Liverpool, one route out of repaying the debt has now closed. Takeover interest from Dubai has been withdrawn following the collapse in the world economy.
That came following a written request from Liverpool's American co-owners and their holding company, Kop Football, with the new deadline now set at 24 July. "The loan does not mature on 24 January," said an insider involved in the deal.
The Anfield club are currently the Premier League leaders but with £30m in annual interest repayments required, the supplementary income from Champions League participation is critical to their business. By July, Liverpool hope, those revenues will be guaranteed.
Although this provides breathing space in the short term, it is unclear how RBS-Wachovia will deal with the loan in the summer. The loan currently earns little more than 5% a year in interest, despite the risk involved with football clubs. City sources expect that even if RBS-Wachovia agree to renegotiate the debt in July they are likely to demand a very large fee, which will further increase Liverpool's indebtedness.
Another imponderable is the financial health of George Gillett's portfolio. Reports in the US say his Nascar team has been scaling back its activities after a drop in sponsorship. His Booth Creek Management Corp is exposed to the ailing automobile industry as the owner of dealerships. Although both Hicks and Gillett regularly stress their continued commitment to Liverpool, one route out of repaying the debt has now closed. Takeover interest from Dubai has been withdrawn following the collapse in the world economy.
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