paul-team.jpg
 

Paul Gambles

Recognized as a regional financial expert, Paul is a regular speaker at industry events on market forecasting, financial planning, investing and legal issues for foreigners living or doing business in Asia.  Besides Paul’s blog, Paul previously distributed his ‘almost-daily’ email – “Daily Updates”, where he gave his views on timely issues affecting financial markets, macro economics, micro economics and everything in-between.

Born in South Yorkshire, England, Paul graduated from the University of Warwick with an Honours degree in English and European Studies.  He began his financial career in the early 1980s as a technical inspector at HMIT with Inland Revenue.  Following a successful career change to the Bank of Scotland in 1987, Paul moved to Bangkok in 1994 to help set-up an investment counseling practice, which today is known as MBMG International.

www.mbmg-international.com

  

quote1.JPGquote2.JPGquote3.JPGquote4.JPG

4 October 2010

A Ticking Kop for Debt-Pool F.C.

It's said that sometimes things have to get worse before they get better and that might be the case at Liverpool FC. There are continued signs the state-owned RBS has run out of patience with owners Tom Hicks and George Gillett and could flog the club. This would remove the pair and open the door for new owners.
 
It's the faintest glimmer of good news for Reds fans after this weekend’s dismal home defeat to monumentally Blackpool added to the deep depression at the club. RBS, which is owed £237.4m by the club, has moved the debt to its Global Restructuring Group, classifying the debt like the Mersey as toxic!  MBMG’s resident  Manchester City fan compiled this for me and I note that they just announced losses of £121m for the 12 months leading up to 31 May this year, spending more on wages than their entire turnover.  But they are not owned by Messrs Hicks and Gillett :))

It continues to look far less likely the loan will be extended beyond the 6 October deadline. Hicks and Gillett have been trying to sell the club for £800m, but if RBS (or rather the UK government who are the effective owners) takes control it will be interested in simply recovering the money owed.

Knock-down sale

The total actually owed by the club is £382.7m when £145.3m in refinancing costs is added in. So the club might well be sold for what its current owners think is a knock-down price – to a bank owned by the British taxpayer! It had been thought this may even mean Liverpool incurred a points penalty, just as Portsmouth did last year.

If RBS takes over it will be able to deal directly with prospective buyers. Those buyers will surely now simply wait until the bank takes over and then buy the club for the price the bank wants to clear the debt. But the bank will not require the same guarantees about football the club's board claim to be seeking.

There of course remains the option that should a sale not being concluded of the club, RBS retain the ability to force the insolvency of Liverpool’s UK parent and associated companies (Kop Football, Kop Football Holdings and Football UK Ltd) into administration. It is very much the final step to remove the owners from the club and take ownership of it themselves, although it does not come without its downside, a nine-point penalty then could be imposed on the club by the Premier League if such a step was taken – 3 points more than the club has managed to achieve this season. Some will say that the prey is being watched and soon the vultures will start to circle.

So it could be a case of 'be careful what you wish for'. Let's remember that Hicks and Gillett arrived on a wave of optimism that mistakes made at other clubs would not occur at Liverpool. A trail of broken promises and a mountain of debt later, Liverpool are a force in decline. 
WALK ON..............!!