Reds board 'resolved' to complete sale

October 13, 2010

The trans-Atlantic fight for the famed but struggling Liverpool soccer team spilled into Texas state court on Wednesday when its current American owners obtained a temporary restraining order preventing the club from being sold to the parent company of the Boston Red Sox.

The current owners called the Liverpool-Red Sox deal an "epic swindle."

Earlier in the day, the High Court in London refused to stop the team's independent directors from selling the team out from under owners Thomas Hicks and George Gillett Jr. at a huge loss to the pair, who bought Liverpool three years ago. A 285 million pound ($453 million) loan to the duo by the Royal Bank of Scotland is due to be paid back Friday, and the pair ceded control of the sales process last spring to an appointee of RBS, who became Liverpool's chairman and negotiated the sale to New England Sports Ventures.

Given that London court decision, the team's board convened a meeting in London on Wednesday night to approve the deal, and Red Sox owner John Henry had just arrived when District Court in Dallas issued the temporary restraining order and scheduled an Oct. 25 hearing.

A few hours later, the board resolved to complete the sale.

Whether the Texas court order can be enforced on events in Britain, in a transaction with holding companies from Delaware, Britain and the Cayman Islands, was not immediately clear. The board voted to complete the sale and said it will seek to remove the TRO issued by Texas District Judge Jim Jordan.

Hicks and Gillett, in a trans-Atlantic legal attack on the sale, said they are suing the three British board members, RBS and NESV for $1.6 billion in damages.

The board ratified the sale hours after High Court Judge Christopher Floyd in London ruled against the owners' attempts to try to block it.

Hicks owned the Texas Rangers before the team went bankrupt this year and was sold in August for $590 million to a group headed by Hall of Fame pitcher Nolan Ryan. Hicks also is trying to sell the NHL's Dallas Stars.

Gillett owned the NHL's Montreal Canadiens before selling them in December to the Molson family along with the team's arena and a concert promotion company in a deal said to be worth $575 million.

Hicks and Gillett bought Liverpool in 2007 for 218.9 million pounds ($431 million). They said they have invested an additional $270 million in cash into the club since then.

"The independent directors consider the restraining order to be unwarranted and damaging, and will move as swiftly as possible to seek to have it removed," the team said.

The Dallas suit was filed against Liverpool chairman Martin Broughton, managing director Christian Purslow, commercial director Ian Ayre, RBS and NESV. Action is also being taken against Liverpool finance director Philip Nash, who isn't on the board.

"The suit lays out the defendants' 'epic swindle' in which they conspired to devise and execute a scheme to sell LFC to NESV at a price they know to be hundreds of millions of dollars below true market value," a statement issued by Hicks' and Gillett's public relations team said.

The statement said the Liverpool board ignored other more lucrative offers and that "the defendants excluded the owners from meetings, discussions and communications regarding the potential sale to NESV and interfered with efforts by the owners to obtain financing for Liverpool FC."

Two others bids emerged this week - one from Singapore businessman Peter Lim and another from the American hedge fund Mill Financial. Wednesday's statement said there was also a bid from FBR Capital Markets for between 375 and 400 million pounds ($595 million to $635 million).