Liverpool civil war erupts as owners reject two buyers

Posted Wednesday, October 06, 2010 by theguardian.com

• Tom Hicks and George Gillett attempt to oust fellow directors
• Boston Red Sox owner's 'credible' bid turned down

Liverpool civil war erupts as owners reject two buyers
The Boston Red Sox owner John W Henry has the means to fund a takeover bid for Liverpool.

The simmering war in the Liverpool boardroom between the American owners, Tom Hicks and George Gillett, and the three other directors, broke dramatically into the open last night after Hicks and Gillett turned down two bids, described as "credible", to buy the club and attempted to remove two directors from the board.

One of the bids is understood to have come from John W Henry, the multi-millionaire owner of the Boston Red Sox Major League Baseball team, and the other from business interests in Asia.

An official statement from Liverpool, surely unprecedented in the history of a club which has always prided itself on keeping internal disagreements private, said the board was preparing to approve the sale yesterday. However, Hicks and Gillett sought to block that decision by ousting the managing director, Christian Purslow, and commercial director, Ian Ayre, and appointing instead Hicks's son and a close ally.

The three directors opposed to the owners – Purslow, Ayre and the chairman, Martin Broughton – who can outvote Hicks and Gillett, clearly approved the release of the statement. It suggested they believed both bids were solid enough to approve because they would "repay all [Liverpool's] long-term debt" and they were preparing to do so.

However, Hicks and Gillett, the statement said, not only opposed the offers, apparently because they would not provide them with a satisfactory enough profit for their shares, but tried to replace Purslow and Ayre with Hicks's son, Mack, and Lori Kay McCutcheon, the financial controller at the Texan's company Hicks Holdings. That would have given the Americans a majority on the board.

The other three clearly resisted and Purslow and Ayre remained on the board last night, finally at odds publicly with Hicks and Gillett. The statement said of the balance of power in the boardroom: "The matter is now subject to legal review."

The statement left no doubt that Broughton, Purslow and Ayre, the majority, were in favour of accepting one of the offers and selling the club. "The board of directors have received two excellent financial offers to buy the club," it said. "A board meeting was called today to review these bids and approve a sale."

The clear implication was that, while both offers committed to clearing the £237m Liverpool owe Royal Bank of Scotland and Wachovia, which is due for repayment in nine days' time, they were not preparing to give Hicks and Gillett much for their shares. One source said the bids would repay Hicks and Gillett the money they have loaned into Liverpool, which stood at £144m at 31 July last year, but not pay them a personal profit for transferring ownership.

Gillett and Hicks have been holding out for a significant payment, even though Liverpool are sinking into crisis while they do not appear to be in a position to repay to the banks. One informed source described Henry as "extremely interested" in buying Liverpool, saying he has the means and expertise required, evidenced by Boston's two championships under his ownership and the iconic Fenway Park stadium.

Liverpool supporters will, however, be naturally suspicious of any US bid after the bitter experience with Hicks's and Gillett's "leveraged buy-out".

A source close to the discussions said Broughton, Purslow and Ayre would not approve any bid which brought more debt to the club. In a clear act of defiance by those three non-owner directors, the board statement concluded: "Martin Broughton, Christian Purslow and Ian Ayre continue to explore every possible route to achieving a sale of the Club at the earliest opportunity."

Hicks and Gillett responded with a statement late last night confirming their "commitment to finding a buyer" but saying they will not accept bids which in their view "dramatically undervalue" the club which they said had nearly doubled its revenues since they took over.