Refinancing for Liverpool FC

US investors Tom Hicks and George Gillett have negotiated a £350m (€471m) refinancing deal for Liverpool FC, the English football club they bought last year. The refinancing has been arranged with Royal Bank of Scotland and Wachovia.

Financing is made up of a £105m Club-level debt that will be used to fund commencement of construction of a new stadium, fund future player transfers, and to meet working capital needs.

A further £245m of debt, also at Club level, will refinance outstanding debt, including debt on the books at the time of the 2006 buyout and to take out the bridge loan which backed the deal itself.

In a statement KOP said the financing is supported by a combination of owner cash, letters of credit and personal guarantees totaling £225m.

Hicks and Gillett bought the Premier League club in early 2006 for £220m. A further £60m of debt previously incurred by Liverpool FC was also taken on.

Concerns have been raised in the past fortnight about Hicks and Gillett’s ability to successfully refinance the bridge loan, supplied by RBS to make last year’s acquisition.

Dubai International Capital, the investment arm of Dubai Holdings, is believed to have conducted talks with the two US businessmen regarding a potential quick flip to the Middle Eastern fund. The latter lost out in the original transaction when Liverpool FC chief Rick Parry allied himself with the Americans.

However, talk of a £500m purchase price less than a year after the buyout and with Hicks and Gillett each netting £75m for no original outlay (the purchase was entirely covered by debt) appears to have resulted in a stalemate.

Speculation that Hicks and Gillett would sell their investment also appears to have waned, despite a series of bad on-the-pitch results and public spats with Liverpool FC’s Spanish manager Rafa Benitez leading to a vocal campaign by supporters to oust the Americans in favour of DIC or another (indeed, any other) owner.