Liverpool ownership battle moves to the court
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The legal battle to force Tom Hicks and George Gillett Jr to sell Liverpool to the Boston Red Sox parent company reached London's High Court on Tuesday, while a Singaporean billionaire is ready to announce an improved bid for the soccer team.
The court hearing takes place exactly a week after Hicks and Gillett tried to oust two board members to prevent them sanctioning a 300 million pound ($476 million) sale to New England Sports Ventures, which the co-owners claim undervalued the club.
That bid was favored over a similar one from an Asian investor, who was identified on Monday by two people with knowledge of the situation as Singapore investor Peter Lim. The people spoke on condition of anonymity because of the sensitivity of the proceedings.
NESV, headed by John Henry, has signed a binding takeover agreement, and the Royal Bank of Scotland, which holds the bulk of the club's debt, announced Monday it has been granted an interim injunction to prevent Hicks and Gillett from changing the board.
RBS wants the sale to the Red Sox ownership group to proceed and has held off from putting the club into financial administration, a form of bankruptcy protection that could see the club being penalized nine points in the standings by the Premier League.
Hicks' Texas Rangers went into bankruptcy in federal court in Texas before it was sold this year.
RBS could have put the club into administration even before Friday's original deadline to repay 285 million pounds ($453 million) of debt because Hicks and Gillett breached loan agreements, two people familiar with the situation told the AP on Monday. They also spoke on condition of anonymity because of the sensitivity of the situation.
Gillett has defaulted on a $75 million loan from the American hedge fund Mill Financial, which helped support a previous refinancing of the loan used by him to buy the club in 2007, one of the people said.
Mill Financial now technically controls Gillett's 50 percent stake, meaning that there has been a change of ownership constituting a technical breach of the agreement with RBS, the person said. Mill Financial didn't return calls seeking comment.
RBS returned to court on Tuesday to reassert the power of independent chairman Martin Broughton to appoint the board.
The bank says Hicks and Gillett forfeited control of the club to Broughton as a condition of extending the repayment deadline in April.
RBS wants the High Court to stop Hicks' bid to replace managing director Christian Purslow and commercial director Ian Ayre with Hicks' son and a member of his Texas staff, claiming it was "in breach of those contractual undertakings" at the time of the refinancing.
"Among other things, that interim injunction prevents Mr Hicks or Mr Gillett taking any steps to remove or replace Mr Broughton from his position as chairman of the board of the Kop (holding) companies or from taking any other steps to appoint or remove any directors from the board of the Kop companies," RBS said in a statement.
"The proceedings tomorrow represent the continuation of Friday's proceedings and relates to breach of contract only. These proceedings do not represent steps by RBS to enforce its security or to appoint an administrator."
Separate legal action may be required by Broughton to assert his legal power to sell the club.
If Liverpool was to go into administration, Lim hopes to outmaneuver the Boston bidders with an improved offer.
Lim claims that he had designated preferred bidder status before being told by text message last week that the Red Sox bid offer had been accepted, one of the people with knowledge of the situation said, also on condition of anonymity.
Lim, ranked 655th on Forbes magazine's list of global billionaires in March with a net worth of $1.5 billion, would fund the deal with his own resources without borrowing any significant sums, the person said. The NESV bid has 17 investors behind it.
Despite approving NESV's bid, the Premier League is still carrying out the same checks into the suitability of Lim to run Liverpool.
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