Liverpool’s American owners have concluded a deal to refinance the bank loan they took out to buy the club in 2007.
Co-owners Tom Hicks and George Gillett are not expected to issue a statement, but the deal is believed to be for another year and will involve them paying back £60million of the original debt.
Negotiations between the Royal Bank of Scotland, Wachovia and the owners have continued for months – the worldwide credit crunch has made them tortuous.
There has been real fear that the banks would call in the loan, while both Hicks and Gillett have searched for someone to take a minority stake in the club for around £100million to no avail.
But a source close to the owners has confirmed that the deal has now been concluded, and before last weekend’s deadline for refinancing the package expired.
The owners have reduced the £290million they owed to £230million, with £60million being repaid, half immediately.
Hicks, 63, and Gillett, 70, purchased Liverpool in 2007 for £174million, taking on £44.8million of liabilities.
At the time, they maintained that financing the debt would not fall on the club. But that attitude changed, and Liverpool now have to find around £40million a year to service the debt, a situation that has enraged fans’ groups and impacted on boss Rafael Benitez’s transfer budget.
The owners have also failed to find the money to build the club’s new stadium with preliminary work on the Stanley Park venture halting during last season.
Extra cash for the stadium “did not form part of any discussions” claimed the source, although there is still a projected date for completion of 2012.
In the run-up to the new deal being concluded, Gillett has sold his 80% stake in the Montreal Canadians ice hockey club for US $580million (£350million), while Hicks is trying to off-load the Texas Rangers baseball team.
It is Hicks who has seemingly experienced most difficulty in coming up with financial backing of late, and he recently defaulted on interest payments on a US $515million (£312million) loan in the States recently.
Prior to the current credit crunch, loans of the size Hicks and Gillett took for Liverpool would be expected to re-financed over three or five years.
But City sources doubt this new deal would be for more than a year in the current climate.
Hicks and Gillett had a one-year arrangement when they first bought the club, and then negotiated another year with a six-month option.
They were granted that option, which expired at the weekend. But critics, particularly fans’ groups, will see this new agreement as just papering over the cracks of a regime that has not been able to take the club forward in the face of tough financial competition from Chelsea, Manchester United, the Spanish giants of Real Madrid and Barcelona, and now Manchester City.
Rogan Taylor, spokesman for the ShareLiverpool group who re-launched their own takeover plans last week for, in effect, a fans’ co-operative, said: “The deal we are hearing about for the re-financing of the Americans’ loans is really what we expected.
“These are the indications we have had from RBS for a while, I would be interested to know really what Wachovia’s view is. It has been rumoured that they were very unsure about this new deal.
“It is little more than an expensive fix – just sticking plaster and making things more difficult for the club to progress in the long run.
“It is still very short term, year to year, if that. The owners are not able to take the club forward.”
He added: “We produced our own plans again last week, and that is based over a much longer period and aimed at the banks.
“There can be political pressure here. We, the tax payers, own RBS and maybe they will eventually see that they can get most of their money back with our scheme and it is a much longer-termed plan.”