Topic: Collating headline financial numbers from the club's Annual Accounts

[davenorthwales]

Next part of the question is where did that money go.
Interest paid is 30m.  Total interest was 44m but only 30m was actually paid.

is it a case of kopholdings paying all their interest to rbs, and LFC Ltd haven't paid all the interest eg 14m interest wasn't paid?

[davenorthwales]

 incredibleL4ever -  what does total liablilities debt mean? as in the times 473m

what figure should the public rely on? the 351m or 473?

from the beginning, who borrowed what and who lent to whom? and how much.

all i can see is the initial 214.9m in feb 2007.. and the 350m refinance in feb 2008.  it was assumed that kopholdings borrowed the 350 and lent LFC Ltd 144m, which doesn't seem to be the case now....what i meant on this bit was not all of the 144m was lent at the same time as the refinance - 45m loaned around the time of the refinance and 99m prior to jan 2008.. is that the case? whichever way it's looked at, the figure balances itself out in the refinance anyway

[davenorthwales]

i think the penny has dropped... the 100m that i have been thinking of all along does exist.

100m was loaned to LFC. and a further 45m was loaned after the refinance in 2008, making up the 145m in total.

thank eff for that.. no wonder i got confuzzled with 144m and 100m, because the 100m is part of the total

[incredibleL4ever]

incredibleL4ever -  what does total liablilities debt mean? as in the times 473m

what figure should the public rely on? the 351m or 473?

from the beginning, who borrowed what and who lent to whom? and how much.

all i can see is the initial 214.9m in feb 2007.. and the 350m refinance in feb 2008.  it was assumed that kopholdings borrowed the 350 and lent LFC Ltd 144m, which doesn't seem to be the case now....what i meant on this bit was not all of the 144m was lent at the same time as the refinance - 45m loaned around the time of the refinance and 99m prior to jan 2008.. is that the case? whichever way it's looked at, the figure balances itself out in the refinance anyway

The 473m is total current liabilities as at 31/07/09.  This is made up of bank loans (234), intergroup loans (144) trade creditors (36) Tax (14) accruals (16) and deferred income (28).  Deferred income is season ticket sales that were received by 31/07/09 but cant be regarded as income as the season had not started (an accounting issue).  I think the 351m figure (net debt) is the better figure to use.  If you start looking a the likes of trade creditors and tax owed, you also have to consider debtors and cash on hand.  Also 351m is the more used one in the media.  Using 473m is distorting figures just to make them look worse.

The initial amount of cash paid to buy the club was 183.5m which was all borrowed.  This came from RBS at LIBOR + 1.5% which makes it about 7% (rates were a lot higher then).  There was also the take over of the remaining debt with make the total purchase price 214m.  The figure of 220m is the one mentioned in the media mostly, but I guess 214 is thereabouts.

At 31/7/07 after the take over there was no loan with Kop Cayman.
In the year to 31/7/08 58m was lent from Cayman to Kop Football group (which includes the club).
By 31/7/09 this had ballooned to 144m.  100m is owed by the club to Kop football Holdings at 31/7/09 (81m at 31/7/08). 
It is not a good idea to try to link the loans directly to the various items of spending.  Basically it is one big pot.......£xm goes in and £ym goes out......and then you have other changes in debtors, creditors and cash on hand which change the cashflows. For example the Caymen loan was 58m at 31/7/08 but the kop to LFC loan was 81m, so some of the LFC loan came from RBS.

[davenorthwales]

hey guys.. cheers again for the info. 

At 31/7/07 after the take over there was no loan with Kop Cayman.
In the year to 31/7/08 58m was lent from Cayman to Kop Football group (which includes the club).

this obviously means that 58m was loaned sometime between aug 1st 2007 and july 31st 2008..
who did kopfootball (holdings) borrow from if it was loaned before the refinance? or should i ask who did kopcayman borrow it from? either they borrowed from someone else prior to the fefinance or diverted the rsb loan somehow to kayman
is there a date that stipulates when it was aquired?

as it is said that 45m was loaned to LFC Ltd after feb 2008, meaning 41m is 'missing' from the 1.44m equation

to make up the 144.4m loaned to LFC Ltd , it looks like 58m+45m+41m

it could mean 58m was loaned out on aug 1st 2007 so not to have it showing up on 2006-07 accounts- not forgetting fernando torres transfer fee was imminent. and babel. plus skrtel later. even though mascherano was signed after the refinance.
same thing for the 45m on aug 1st 2008.. keane, riera, dossena purchase
but if they were waiting until august, it doesn't make sense for the 41m to show up in 2008-09 account

[davenorthwales]

with the 351m figure, which has been banded about for a while now, issn't the interest on the 144m meant to get added on? 

i would have thought the current debt is 381, being made up of the rsb 237 plus the 144 ...
or is the 351 is based on the 350 refinance?

yeah, the 473m tony barret figure can be 'misleading'. but it can be plausible if calculated and estimated corectly.
then again, the 237 accumulates interest as well as the 144. 
so the only really reliable figure i can think of is the 381 plus/minus current balance sheet and interest incruements.

then again, the 381 doesn't include the 14m interest not paid so may as well add that on bringing it to 395m.

if it is true that there was a 55m loss 2009-10, that means 450m, closer to the barrett figure. or if it is 65m, it becomes 460m and barrett is spot on

[davenorthwales]

jack, yeah cayman figures wouldn't show up in britain.  any possibility of cayman acquiring money from hicks holdings in usa?

auditors didn't sniff out any rats then?

like the post on page 1, the only way to find out is by forensic accounting, but if nothing untoward shows up with the auditors as most figures tally up to us. i can't see money vanishing, except the wasted stadium money, but it is there for whoever and whenever.  heaven help us if a new owner wants a new design. or completely wasted if we stay

[davenorthwales]

AFAIK, the accounts dont say what dates any loans where made by KC to any of the UK group.  But KPMG must have seen evidence which they were satisfied by.

bit strange a date doesn't show up.. even more strange that if there was anything untoward on the cayman side was kept schtumm. but if figures do add up, then there's no reason to alert anyone

[davenorthwales]

just got from a bike ride. sat down and something crossed my mind. not good.

if next season was successful enough and managed to finish in the top four and just happened to win the europa cup which the winners get more these days approx 15m+ etc.  by the time get to the final, the next round of interest on the 144 comes round which will be around 16m - the winners money will more or less pay it off.
the following year get to the champions league quarter finals at least and that seasons CL money will pay off the next lot of interest..

how the heck is it going to be paid off and winning everything and qualifying for this and that and still the debt won't go down.  five years worth of CL qualifiers quarter final appearances in a row should clear the interest bill and a bit of cash left over to buy a player or two.

[davenorthwales]

ah right, i see now. the interest on the 144 is in the 351.  didn't realise that sorry. i should have but...

what else i didn't realise is this bit.. that RBS might have given permission for some interest to be paid to Kop Cayman.

it's a pecking order.  rsb want their money and so do kopcayman. we can't pay the interest unless given permission from rsb. if rsb say they want the money, the debt isn't getting solved on the LFC side.

it's a pity have to wait for that long to see this years figures.  hope someones sneaks them out.
bit of a mystery how a loss off 55 or 65m was mentioned a few weeks ago, plus the times story. 
so it's 351 +/- 2009-10. all we know of is the aquilani transfer, alonso (i don't understand how j.Antikop came up with 23m, have you seen this?) plus dossena, voronin, minus the CL money after december but got replaced with europa cup money etc etc. plus the rafa money..

[rocco]

So many figures .... is there a break even figure if the yanks sold within the next month or so ?
cheers

[incredibleL4ever]

So many figures .... is there a break even figure if the yanks sold within the next month or so ?
cheers

For them to break even or the club?

For them they need 351m to clear the net debt plus anything borrowed since July last year.

[incredibleL4ever]

G&H would probably say that the figure involves consideration of the bank debt plus the debt to KC (Kop Cayman).

For the bank debt, G&H just want to be released from all liability on their guarantees.  So either the new buyer needs to hand over enough cash to clear the bank debt.  Or else, which is more likely, the new buyer needs to enter an agreement with RBS/Wachovia to take over (some of) the debt.

The bank debt is probably £237m plus any unpaid interest and other charges.  It was £250m on 31 January.  It is likely that some payments have been made since then.  But it is also likely that further charges have been incurred because the companies did not clear the debt in March.  So, bank debt is likely to be £237m to £260m.

The debt to KC was £145m on 31 July 2009.  If interest has not been paid, then it will be £158m.  If the companies have paid interest and charges to the bank, then they probably just added that to the KC debt.

So, according to what G&H would claim, probably £415m is needed for them to break even.

(Either no money has been paid to bank since Jan 2010, in which case approx RBS £257m plus KC £158m.

Or bank debt brought down to maximum capital level, in which case approx RBS £237m plus KC £178m.)


Of course, imho, the true break even figure would be much lower,  somewhere between £200m to £250m.  But I can't prove it.


I also dont think that the eventual decision on a sale will be blocked because the buyer offers less than G&H's theoretical £415m break even figure.  The banks are insisting on a sale regardless.  So - as Hicks himself says - the market is the market.  And if the best offer is £250m, then they'll have to take it.  If the best offer is £350m  (a substantial profit, imho, but a paper loss on G&H's figures) then they should jump at that.

Jack just wondering why you think that the true cost of ownership to date had been 200m - 250m.  Obviously there is the interest on the Kop Caymen debt,  but surely the RBS/Wachovia amount was actually borrowed and the capital amount from Kop Cayman was actually transferred to  Kop Football, or are you thinking that there might have been some "set-off" against "costs" that might not be easily verifiable?

[AKABillyGee]

Looking at the alleged identity of prospective buyers, the one thing that has surprised me is that they appear not to have attempted to buy the (LFC) debt off RBS, Wachovia el al.  If it is true that prospective buyers are located in the Middle East then they will control financial institutions that make inter-bank debt purchase easy. That would be a low cost way of gaining control and leverage whilst at the same time ensuring that any debt payments made by Hicks. Gillette and Purslow are made to a company that will eventually own the entire organization.  It would certainly be of interest to RBS etc as they can make a guaranteed risk free return.  That this has not happened puts a big question mark on the validity of these rumours of imminent purchase.

[incredibleL4ever]

Looking at the alleged identity of prospective buyers, the one thing that has surprised me is that they appear not to have attempted to buy the (LFC) debt off RBS, Wachovia el al.  If it is true that prospective buyers are located in the Middle East then they will control financial institutions that make inter-bank debt purchase easy. That would be a low cost way of gaining control and leverage whilst at the same time ensuring that any debt payments made by Hicks. Gillette and Purslow are made to a company that will eventually own the entire organization.  It would certainly be of interest to RBS etc as they can make a guaranteed risk free return.  That this has not happened puts a big question mark on the validity of these rumours of imminent purchase.

Right now I doubt it RBS would offer any discount for the debt because they probably still believe that a buyer will be found to at least cover their debt.

[AKABillyGee]

There would be no reason to seek a discount for buying the debt generated by G & H.  Given the leverage that ownership of the debt would provide to any potential purchaser it would certainly be in the their interest to offer the holding bank a premium to purchase the debt.  In this situation both the bank and the potential purchaser win as the bank receives monies over its worth for the 'debt product' whilst the new owner of the club's debt becomes both the willing purchaser of the asset and the debt owner/interest receiver.  That is one powerful situation to be in.

[Tes]

Looking at the alleged identity of prospective buyers, the one thing that has surprised me is that they appear not to have attempted to buy the (LFC) debt off RBS, Wachovia el al.  If it is true that prospective buyers are located in the Middle East then they will control financial institutions that make inter-bank debt purchase easy. That would be a low cost way of gaining control and leverage whilst at the same time ensuring that any debt payments made by Hicks. Gillette and Purslow are made to a company that will eventually own the entire organization.  It would certainly be of interest to RBS etc as they can make a guaranteed risk free return.  That this has not happened puts a big question mark on the validity of these rumours of imminent purchase.

How would that actually work out in reality?

[incredibleL4ever]

How would that actually work out in reality?

I think what he is suggesting is that if the interested party buys the debt from RBS he controls the security and as the current arrangement is either techincally in default or is some short term arrangement the debt could be called in within months.  The debtholder can then force H&G to sell as they would not be as "sensitive" as RBS might. 

The one issue is that in these circumstances what would happen (I think) is the Kop Football debt to the debtholder would be paid off by Kop football selling its shares in Liverpool FC.  However Liverpool FC also 100m+ to Kop Cayman and that would be called in by H&G. 

[Tes]

I think what he is suggesting is that if the interested party buys the debt from RBS he controls the security and as the current arrangement is either techincally in default or is some short term arrangement the debt could be called in within months.  The debtholder can then force H&G to sell as they would not be as "sensitive" as RBS might. 

The one issue is that in these circumstances what would happen (I think) is the Kop Football debt to the debtholder would be paid off by Kop football selling its shares in Liverpool FC.  However Liverpool FC also 100m+ to Kop Cayman and that would be called in by H&G.

The second part was mainly what I was wondering about. Whether or not Kop(Caymen) would still have a claim against the club for that outstanding debt and whether the club would have to find some way of paying it off.

[AKABillyGee]

It would therefore be  possible, in theory, for the debt purchaser to foreclose on Kop Football or insist on full payment of all debts. As 'incredible' alludes to, the downside would be that Kop Caymen would call in the £100m loan allegedly arranged by G & H to LFC. However if the debt purchaser took over the assets of Kop Football, i.e. Liverpool Football Club, they could obtain clear ownership for the cost of purchasing the debt notes from RSB and Wachovia - which would clear bank debts - and paying the £100m debt recall to KC.  Headline cost, around £400m including the premiums the banks would demand for the sale of the debt.

[incredibleL4ever]

It would therefore be  possible, in theory, for the debt purchaser to foreclose on Kop Football or insist on full payment of all debts. As 'incredible' alludes to, the downside would be that Kop Caymen would call in the £100m loan allegedly arranged by G & H to LFC. However if the debt purchaser took over the assets of Kop Football, i.e. Liverpool Football Club, they could obtain clear ownership for the cost of purchasing the debt notes from RSB and Wachovia - which would clear bank debts - and paying the £100m debt recall to KC.  Headline cost, around £400m including the premiums the banks would demand for the sale of the debt.

Yup.

Obviously they would have to honour the loan agreement between RBS/Wachovia and Kop Football which outlines underwhat circumstances foreclosure can occur.  It would be open to H&G to try to take Kop Football into administration prior to the foreclosure - I assume the debt holder has to give a notice period.  However this would probably mean the debt holder would buy the club from the administrator.

[redmen77]

Yup.

Obviously they would have to honour the loan agreement between RBS/Wachovia and Kop Football which outlines underwhat circumstances foreclosure can occur.  It would be open to H&G to try to take Kop Football into administration prior to the foreclosure - I assume the debt holder has to give a notice period.  However this would probably mean the debt holder would buy the club from the administrator.

Unfortunately I now see this scenario rearing its ugly head (assuming RBS have the bottle to go through with it this time). RBS call in all or part of the loan (£100M pay down as previously reported). H&G, MB & CP cry foul saying that they haven't been given sufficient time to find a buyer and so have to sell the crown jewels to satisfy the banks. We sell Torres, Mash and Gerrard (probably at a reduced figure becasue it will be well publicised we are F*cked (and MB may well be feeding this to Chelsea!), the banks get their cash and we are left well and truly in the shit.

[Coady]

Unfortunately I now see this scenario rearing its ugly head (assuming RBS have the bottle to go through with it this time). RBS call in all or part of the loan (£100M pay down as previously reported). H&G, MB & CP cry foul saying that they haven't been given sufficient time to find a buyer and so have to sell the crown jewels to satisfy the banks. We sell Torres, Mash and Gerrard (probably at a reduced figure becasue it will be well publicised we are F*cked (and MB may well be feeding this to Chelsea!), the banks get their cash and we are left well and truly in the shit.

But if the debt is reduced from player sales like Gerrard, Masch and Torres then the debt will be more manageable. Whats stopping them fixing that loan over a longer term like Purslow said.

[redmen77]

Nothing at all, which is a fear because then we are likely to be s

But if the debt is reduced from player sales like Gerrard, Masch and Torres then the debt will be more manageable. Whats stopping them fixing that loan over a longer term like Purslow said.

Nothing and thats the big fear. If they can secure longer term debt than the chances of them leaving become even slimmer, however our demise into mid-table medicrity is signed sealed and delivered.

[Tes]

Do they really think they'll be able to then build then stadium and maximise the revenues from it when we're a mid table (at best) team full of average journeyman?

[royhendo]

What are the published dates for the four sets of accounts by the way lads?

[Zeb]

Not sure what you're after Roy...

All accounts are for year ending 31st July.

Just for interest, this year's Liverpool Football Club and Athletic Grounds is signed off by Nash on 25th February 2010 and seems to have been filed 30th April 2010. Kop Football Ltd is signed off by Hicks and Gillett on 17th March 2010 and seems to have been filed 30th April 2010. Kop Football (Holdings) Ltd is signed off by Hicks and Gillett on 25th February 2010 and seems to also have been filed 30th April 2010.

[royhendo]

That's good enough lads, thanks - I want to make sure it's clear numbers are historical and be about right with when those dates were.

Is it possible to collate year-on-year expenditure on the stadium?

[Tes]

Not sure what you're after Roy...

All accounts are for year ending 31st July.

Just for interest, this year's Liverpool Football Club and Athletic Grounds is signed off by Nash on 25th February 2010 and seems to have been filed 30th April 2010. Kop Football Ltd is signed off by Hicks and Gillett on 17th March 2010 and seems to have been filed 30th April 2010. Kop Football (Holdings) Ltd is signed off by Hicks and Gillett on 25th February 2010 and seems to also have been filed 30th April 2010.

Do these all refer to year ending 31st July 2009?

[Zeb]

Do these all refer to year ending 31st July 2009?

Yes. Should have been clearer - last accounts filed which covered 1st August 2008 to 31st July 2009. However, what you will see in the notes to the accounts is references to events after that date and almost up until the sign off date, so we have some glimpses of some things going on in the 09/10 financial year.

----

Roy - only got y/e 09 open but it was £22.333 million for 08/09. I know the £10.3 million spent on prior stadium design was written off in the 06/07 accounts. So that just leaves £23.182 million to locate in the 06/07 and 07/08 accounts.

[Tes]

Thanks, Zeb.

[Zeb]

Thanks, Zeb.

Sorry for not being clearer when saying 'this year's accounts'. Kick me hard when you see me taking shortcuts

[royhendo]

Roy - only got y/e 09 open but it was £22.333 million for 08/09. I know the £10.3 million spent on prior stadium design was written off in the 06/07 accounts. So that just leaves £23.182 million to locate in the 06/07 and 07/08 accounts.

So the overall total is in fact £55.8m?

[royhendo]

Is this correct lads?

2006 - £10m written off from the previous stadium design
2006 to 2008 - £23.18m
Financial year to 31st July 2009 - £22.333m

[dwesty]

I'd love to see an itemised breakdown of those astronomical 'stadium' costs...

Hicks' pet goat probably has a stadium design company in the Caymans.

[Witherkay]

Yes. Should have been clearer - last accounts filed which covered 1st August 2008 to 31st July 2009. However, what you will see in the notes to the accounts is references to events after that date and almost up until the sign off date, so we have some glimpses of some things going on in the 09/10 financial year.

Yes, the auditors are compelled to 'considered' all significant events between the balance sheet date (i.e. 31st July) to the date the accounts are actually signed off. If they feel the accounts do not give a good enough explanation of these events, they either qualify their audit opinion, modify their audit report to make readers of the accounts aware of the facts or insist the notes to the accounts are changed to make them clearer before they sign off. If the company and the auditors disagree how issues are to be disclosed, normally this means the accounts just don't get signed at that point. Also, auditors like to sign off the accounts of all the companies in a group at the same time, especially where companies are very reliant upon each other.

This is relevant because...

Just for interest, this year's Liverpool Football Club and Athletic Grounds is signed off by Nash on 25th February 2010 and seems to have been filed 30th April 2010. Kop Football Ltd is signed off by Hicks and Gillett on 17th March 2010 and seems to have been filed 30th April 2010. Kop Football (Holdings) Ltd is signed off by Hicks and Gillett on 25th February 2010 and seems to also have been filed 30th April 2010.

You can see that the various UK companies weren't signed off together, with Kop Football a good 3 weeks later (if those dates are correct) presumably reflecting particular problems agreeing the disclosure in that set of accounts with the auditors. Conversely, it could also mean that the directors were keen to sign the other two off before Kop Football was 'agreed', so that something that was due to happen early March 2010 in either of those companies would not be covered by the auditors post balance sheet review for the 2009 accounts. Anyone any ideas?

Also, even when signed off, the companies did not file the various sets of accounts until the last possible day before their due date (9 months after the year end).  Who were they keeping them from? The fans? I would have thought RBS would have seen them well before then anyway, as Banks normally insist on receiving finalised accounts 'as soon as reasonably practical' after they were signed off. So why was CP and the owners trying to keep the info out of the public domain so long? Keep it from potential investors? From the fans?

[flashman]

what dates were the audit reports signed?

[Zeb]

So the overall total is in fact £55.8m?

Yes, if you're including them changing the stadium design which meant writing off the money previously spent on the old design. H&G themselves have spent £45.515 million. What's really interesting is what would happen if they had to write that off and so the tangible assets of the company had to be written down by that amount....

1st August 2006 - 31st July 2007 - £10.3 million spent by Moores/Parry written off. Take over was February 2007, so in effect you can narrow it down to some time between February and July.
1st August 2006 (effectively February 2007 though because of takeover date) - 31st July 2008 - £23.182 million spent - someone with accounts for those two years should be able to find out exactly which financial year.
1st August 2008 - 31st July 2009 - £22.333 million spent.

Preparatory work was halted in September 2008 but further expenditure was incurred during the year using credit facilities from RBS which they can use for pre-construction work.

[Zeb]

Interesting Witherkay. Will add in some detail which may explain the 'whys'....

what dates were the audit reports signed?

Liverpool Football Club and Athletic Grounds Ltd and Kop Football (Holdings) Ltd  - 26th February. At this date, refinancing has been secured from RBS until 3rd March.
Kop Football Ltd - 17th March. At this date, RBS have extended refinancing til 19th March.

[flashman]

With my audit hat on, no reason why there should be a delay filing accounts at CosHse once signed by auditors.
Usually the rush is on to get signed by the filing deadline, but once done its couriered over to Cos Hse