Wednesday, December 3, 2008

Finally, Some Good Financial News Regarding Hicks and Gillett

Just kidding.

Anyway, Liverpool co-owner George Gillett has a $75M payment due in January. This bit of debt is particularly interesting because Gillett apparently secured it by putting up his 50% of Liverpool as collateral. So that means if he defaults on the loan, the folks holding it could conceivably assume Gillett's share of Liverpool F.C.

Gillett borrowed the money from a group called Mill Financial on January 25, 2008. Mill Financial is a unit of Springfield Financial Co., which is based in Virginia. To secure the loan, Delaware-incorporated Gillett Football LLC, pledged all of its "right, title and interest in Football Investments LLC," lien documents filed in Delaware show. Football Investments LLC is the company through which Gillett owns his 50% stake in Liverpool F.C. (the other half of the club is owned by Tom Hicks).

From the Sports Business Journal:

The duo originally borrowed about 280 million pounds (currently $429 million) from Royal Bank of Scotland and Wachovia to finance their acquisition... Hicks and Gillett had expected to refinance easily, but the credit markets soured in the summer of 2007. A hoped-for refinancing proved arduous, and the lenders required the duo earlier this year to put in about $150 million of equity they were not envisioning. That means there is at least $575 million of debt directly tied to Liverpool.

Springfield is selling the debt and say a transaction will be completed this month (December). According to the SBJ article, there are at least two groups trying to purchase the debt. One is Gillett himself with some additional investors. The other is a separate group with "eye on seeking control of Gillett’s Liverpool interest."

Basically, if the non-Gillett folks purchase the debt and Gillett doesn't have the funds to cover the money due, they could assume his half of Liverpool. If Gillett fails to purchase the note, then he does have the option of simply paying it off when it's due (Jan 25, 2009), assuming he can come up with the cash. But if you're Gillett, you're probably looking at paying a premium on your own debt to compete with the other group, and if you are bringing other investors in to do that, that's a sign that you don't have the $75M.

Anyway, there is more in the Globe and Mail here and on soccernet here. The Globe and Mail story is worth the read because it's written from the standpoint of what the impact might be on Gillett's ownership of the Montreal Canadiens, so it has a wider scope on Gillett's sports business operations. The soccernet page is worth a click because, above the Gillett piece, is a story about beer.


Keith said...

$5 for a pint at Villa Park is better than $8 for a can at Shea. Can't wait to make the trip!

Precious Roy said...

Figured the beer would be what people really care about. We should just go the With Leather lowest common denominator route and put tits on the bottom of each post.

Keith said...

Now, now, Roy, it's not that the post isn't intellectual enough, it's that we already know that Liverpool's finances are a shambles, and that they'll likely be bought by DIC in the end.

The beer portion of the Soccernet story provided some shocking news- that the Brits charge Brooklyn bar pint prices at stadiums, and still think that's a bit high.

Mike Georger said...

i thought you couldnt get booze in those stadiums because they didnt want those retard monkeys fighting in the stands?

i was really hoping the body of this post would be 'they died' and nothing else. maybe a .gif of someone doing a jig.

these guys aren't dumb enough to let the club go into any sort of default, and if they are forced to sell for less just to avoid getting fucked thats even better because it means whoever buys it will have more money to spend on whatever fucking horrendous fullback rafa is eyeing next.

JT said...

I do enjoy the fact that whenever this little Hicks/Gillett loansperiment does come to an end, DIC is just waiting to finally buy the club they've wanted for years. That is a nice feeling to know that when the Yanks get evicted, there is someone richer to pick up the pieces.


Keith said...

So you're fine becoming the next Chelski, Tyler?

JT said...

Nice one Keith, you firestarter!

No, we won't become Chelski, we'll just be another well-heeled, well-run club, and we certainly won't splash the cash as insanely and irresponsibly as Chelski did when it was still Chelski. I predict that most of DIC's LFC money will go making a new stadium a reality, as well as stabilizing things. Sure, we'll buy a couple here and there, but it won't be anything close to the madness and profligacy of Abramovich.

Precious Roy said...

Yeah, this is a little different in that someone else is bidding for the debt, and they are attempting to purchase it merely because 1/2 of Liverpool was put up to secure the loan. If Hicks is unsuccessful in his attempt to buy the debt he could be in real trouble here (again *could*). And DIC has nothing to do with this (unless DIC is that other party). And why is every Liverpool fan so certain that DIC is still sitting there as a white knight?

Mike Georger said...

DIC wants to get in on a club, and if this shit keeps up hicks and gillet will be held over a barrel (omg possible oil pun) on the price. i have a feeling they are going to end up taking a loss on the sale that has to happen at some point.

Precious Roy said...

A) At last count (I think in the summer) DIC were distancing themselves from a bid. That could be strategic, but I'll take it at face value for now.

B) That's why this is different. A default here potentially puts another face in charge of 1/2 of Liverpool (a number of dominoes have to fall but it's suddenly not that improbable). If that person (or group) has no interest in selling, then it doesn't matter waht DIC does short of offer eleventy billion dollars.

Mike Georger said...

i dont care who is in charge as long as theyre more financially stable than hicks and gillet.

Andrew said...

Who cares of 'Pools finances? Abu Dhabi Group can provide financial stability to the entire Prem.