Second suitor muddies waters at 'Pool
THE Royal Bank of Scotland were today backing the Liverpool board in the High Court in its dispute with Tom Hicks and George Gillett Jr, the Liverpool co-owners, at the start of a complicated legal process to decide the future of the indebted club.
The bank's support for the strong stance taken last week by Martin Broughton, the Liverpool chairman, against his two American shareholders increases the chances that an agreed £300m takeover by New England Sports Ventures (NESV), owner of the Boston Red Sox, will be successful.
But the deal could still collapse after it emerged last night that Peter Lim, who submitted a rival bid rejected by the Anfield board, is preparing to increase his offer. If he does, the directors may be duty-bound to consider it, despite their agreement with NESV.
The billionaire stockbroker from Singapore, who owns Manchester United theme bars in Asia, is said to have been neck-and-neck on price but was beaten by NESV's willingness to cover more of the £40m of fees owed by Hicks and Gillett to RBS.
Lim's 11th-hour decision to break cover, despite swearing Broughton and his advisers to secrecy over his identity, muddies the waters further in an already messy takeover situation.
The first step towards a resolution was taking place today in Court 16 of the Royal Courts of Justice, when Mr Justice Floyd considers an injunction taken out on Friday by RBS against Hicks and Gillett to prevent them ousting the board.
The pair attempted last week to sack Christian Purslow, the managing director, and Ian Ayre, the commercial director, after the club's directors approved the NESV sale.
RBS says this act amounted to a breach of contract after Hicks and Gillett agreed in writing to certain "corporate governance arrangements" when they were extended a £237m line of credit in April. The power to change the board resides solely with Broughton, according to the bank.
The judge will be asked to decide whether the co-owners are in breach of their contract with RBS.
The hearing could be relatively straightforward. Danny Davis, a partner at Mischon de Reya, a law firm, said: "If Hicks and Gillett signed an agreement, I see no hope for them at all."
A separate case, likely to be heard this week, will rule whether the Liverpool board has the authority to sell the club to NESV without the sanction of the shareholders.
This is more open to interpretation because it rests on whether the £300m price agreed with NESV is "reasonable". Hicks and Gillett argue that it is not and substantially undervalues the club they bought in February 2007 for £218.9m.
The importance of this "declaratory judgment" is underlined by Broughton's use of Lord Grabiner, QC, a commercial lawyer with a formidable reputation. He is also one of the country's highest-paid barristers at £3,000 an hour, whose rate for a fortnight's work is £250,000.
Were the judgment to go in the club's favour, it would remove the Friday deadline for RBS to call in its £282m debt by legitimising the NESV sale.
If Hicks and Gillett win, it leaves RBS with the less palatable option of putting Kop Holdings, the club's parent company, into administration to force a sale.
This would result not only in a nine-point penalty by the Premier League, but would also expose Liverpool to what Broughton described as "predators".
An administrator, acting outside the control of RBS, would have to sell the club to the highest bidder.
Either way, the winners are likely to be the lawyers as the High Court bill reaches £500,000.
By full time in this saga, the total could be in seven figures.