Source: Telegraph
Liverpool's £350m debt sets off alarm as Tom Hicks and George Gillett warned
The warning is contained in accounts filed yesterday which also reveal that Hicks and Gillett paid £36.5 million in interest last year, contributing to a holding company loss of £42.6 million.
The American co-owners are in negotiations with banks RBS and Wachovia to refinance the debt, repayable on July 24, and are also seeking fresh investment from a third party.
The owners remain confident they will agree a deal with the banks, but in accounts for the club and its holding company, Kop Football (Holdings) Ltd, auditors KPMG warn of a 'material uncertainty' over the club's future.
'The group has credit facilities which expire on July 24. The directors have initiated negotiations to secure the replacement finance ... and these are ongoing,' KPMG write. 'These conditions ... indicate the existence of a material uncertainty which may cast significant doubt on the Group's and parent company's ability to continue as a going concern.'
KPMG's comments serve as a reminder of the crucial nature of the refinancing talks. The accounts also demonstrate that the profit made by the club, £10 million before tax in 2007-08, is swallowed by interest payable on the owners' loans.
Sources close to the owners said that KPMG's warning was a technical formality given the proximity of the refinancing date.
They also said Uefa has just renewed the club's licence to compete in the Champions League, a condition of which is that the club is a going concern.
In the accounts Hicks and Gillett insist: 'The directors have a reasonable expectation that the group will secure adequate resources to enable [it] to continue in operational existence.'
The accounts also show they have provided personal guarantees against £185 million of the debt.
