Source: Team_Talk
RBS seeks court ruling over Reds sale
The Royal Bank of Scotland will today seek a High Court ruling that Tom Hicks and George Gillett are not able to block the sale of Liverpool.[LNB] The club's major creditors secured an injunction on Friday to prevent the Americans sacking independent chairman Martin Broughton or any other board members.[LNB]They return to court later today attempting to prove the Americans were in breach of contract and remove the final stumbling block to a £300million takeover by New England Sports Ventures (NESV) which will see them recoup their original £237million loan to Hicks and Gillett when they bought the club in March 2007.[LNB]The emergence last night of Singapore billionaire Peter Lim as the man behind the Asia-based bid overlooked in favour of NESV by the Liverpool board does not change the current situation.[LNB]NESV, owners of the Boston Red Sox baseball franchise and led by John W Henry, have already concluded their negotiations and should RBS be successful in court, they are in a position to effect a swift change of ownership.[LNB]The bank's case is built around the fact that when Hicks and Gillett renegotiated an extension to their refinancing in April to allow a sale to be completed, they agreed to certain conditions.[LNB]One of those was a change to the board which saw Broughton come in alongside managing director Christian Purslow and commercial director Ian Ayre, giving them a three-to-two majority to prevent the Americans blocking any sale they did not feel was in their interests.[LNB]It was also made clear Broughton was the only person who could change board members so when Hicks tried to sack Purslow and Ayre last week on the eve of the meeting to approve the NESV bid, the chairman rejected the move.[LNB]"RBS, in its capacity as lender to the Kop group of companies, received the benefit of various contractual undertakings from Mr Hicks and Mr Gillett in relation to the corporate governance arrangements that Mr Hicks and Mr Gillett agreed would apply to the Kop group of companies with effect from April 2010," a statement from the bank read.[LNB]"Those undertakings provided for the appointment of Mr Broughton as chairman of the board and the appointment of the chief executive and commercial director of LFC to the Kop boards.[LNB]"As is well known, Mr Hicks and Mr Gillett purported to make changes to those corporate governance arrangements on October 4. This was in breach of those contractual undertakings.[LNB]"In light of that purported breach of contract, RBS sought and obtained on Friday October 8, 2010 an interim injunction (preventing the removal of Broughton or any directors) against Mr Hicks and Mr Gillett until a further hearing scheduled for Tuesday."[LNB]It also emerged yesterday that Liverpool's owners have been technically in default of their refinancing agreement for some time, despite the repayment deadline in two days' time.[LNB]RBS have chosen, however, not to enforce that default position which would have led to Kop Holdings going into administration and risk Liverpool incurring a nine-point deduction from the Premier League.[LNB]That could still happen if Hicks and Gillett have not repaid their £280million debts by Friday's deadline, but the court hearing is not concerned with those issues.[LNB]Hicks, who with Gillett stands to lose £144million if the NESV deal goes through, has maintained no such agreements with the bank exist and therefore Broughton has no authority to reject his plan to parachute son Mack and Lori McCutcheon, who works for Hicks Holdings, onto the board.[LNB]Last week his New York-based spokesman Mark Semer told Bloomberg News: "There were no such undertakings given to Broughton.[LNB]"The board has been legally reconstituted and the new board does not approve of this proposed transaction."[LNB]
