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Monday, April 20, 2009, 2:04pm CDT
Hicks Sports Group's problems date to last summer
Dallas Business Journal - by Daniel Kaplan SportsBusiness Journal

A federal bank regulator last summer, before the credit markets imploded, downgraded the $515 million of debt carried by Hicks Sports Group, which owns the Texas Rangers and Dallas Stars, financial sources said, signaling that the problems at the financially troubled company predated last month’s loan default.

HSG failed to make an interest payment on March 31. While tight credit markets are a major factor in the inability of team owner Tom Hicks to get banks to relax loan terms, HSG’s problems were festering before the economy tanked last fall, the financial sources said.
Last summer, the Office of the Comptroller of the Currency downgraded the loans to nonperforming, sources in the HSG bank group said. The OCC conducts periodic reviews of syndicated loans on bank balance sheets, known as Shared National Credits.The OCC declined a Freedom of Information Act request by this publication to see the downgrade, saying loan actions were not public information. A Hicks spokesman declined to comment on the downgrade.

An OCC downgrade to nonperforming means “the borrower is highly unlikely to support the underlying obligation,” said Irwin Kishner, chairman of the corporate practice at New York-based law firm Herrick Feinstein. As part of its mandate to regulate banks, Kishner said, the OCC reviews loans at banks and, as with the case of HSG, can judge them to be in trouble. That means the banks in the syndicate have to set aside more cash to cover potential losses.

Hicks has been funding operating losses for HSG’s teams out of his own pocket at least since the summer and likely far longer. Like many wealthy owners, the stock market declines have eaten into his fortunes and have made him more reticent to continue covering his teams’ red ink.

In a statement, Hicks said he voluntarily missed the interest payment to force the lenders to allow him to tap an interest reserve and to modify covenants.

Already having had to set aside cash because of the OCC downgrade, twinned with the clenched credit markets, the banks are unlikely to greet Hicks’ pleas for leniency with much sympathy.

“It’s one of the more foolish moves I have ever seen,” said one banker from a bank in the loan group who requested anonymity because he was not authorized to speak, of Hicks voluntarily defaulting on the loan.

Financial institutions in the syndicate include JPMorgan Chase and Galatioto Sports Partners. A spokesman for JPMorgan did not return calls. GSP declined to comment.

One banker not in the bank group suggested that what Hicks might be trying to do is force the banks to sell the loans at a discount, and he could then swoop in to buy them. But Hicks also has nearly half of each of the Rangers and Stars on the market and may be just trying to buy time to raise the money to pay off the debt.

Hicks’ half-ownership of Liverpool FC is not housed in HSG.

At the end of the month, the banks could move to foreclose on the teams if they do not reach agreement with Hicks. To do so, however, would require going through the leagues, which historically have been opposed to banks taking possession of teams.

The NHL referred questions to the Stars. MLB executives declined to comment.


From The Times
April 23, 2009
Owners in united states of mind to keep Liverpool
Oliver Kay

Tom Hicks and George Gillett Jr, Liverpool’s American owners, have pledged to work together to battle through the financial crisis that has raised serious doubts about the ability of either of them to raise the funds to retain control of the club.

Hicks and Gillett are under growing pressure to refinance the club’s £350 million loans with Royal Bank of Scotland (RBS) and Wachovia, the American bank, before they are due to be repaid on July 25. In a rare show of unity, the Americans entertained representatives of RBS at Liverpool’s 4-4 draw against Arsenal at Anfield on Tuesday evening and attempted to persuade their guests that their differences are behind them as they look to sustain their troubled regime beyond July.

A refinancing agreement would give Hicks and Gillett some stability, at least in the short term, but both are under growing financial pressure. Gillett is looking for an external investor to buy into his sporting empire, which includes the Montreal Canadiens ice hockey franchise as well as his 50 per cent stake in Liverpool, while Hicks, who has been more bullish about his financial position, was forced to admit recently that his Hicks Sports Group had defaulted on monthly interest payments on three loans as he, too, battles with the consequences of the economic crisis.

A change of ownership still appears the most likely scenario in the medium term. Although Hicks continues to make overtures to the al-Kharafi family, either to be minority investors or to buy the club in case he and Gillett fail to raise the capital needed to refinance, doubts remain about how genuine the Kuwaitis’ interest is. A renewed bid from Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, remains a possibility, though not at this stage.
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Whichever way the ownership issue is resolved over the coming months, there seems certain to be a return to Liverpool for Kenny Dalglish, the most celebrated player in the club’s history.

Dalglish, who resigned as Liverpool manager in February 1991, has been out of football for almost nine years, but is discussing a return to Anfield in a consultancy role in which he would work closely with Rafael Benítez, the manager, and act as a figurehead for the club’s youth academy.

“If I can be of help to the club I love, in any capacity, I’m more than happy to play any part I can,” Dalglish, 58, said. “If the manager or the people running the club think there’s a role for me, I’ll fill it happily.”

Habs sale could lighten Gillett's debt load
 Article  Comments (1)  ANDREW WILLIS AND BOYD ERMAN

From Friday's Globe and Mail

April 24, 2009 at 1:57 AM EDT

The Habs nation stretches from sea to sea to sea. But as George Gillett ponders the fate of his sports empire, he is more interested in building a Liverpool FC franchise that could attract a global fan base than in holding on to the Montreal Canadiens.

As the Canadiens begin what is expected to be a tumultuous off-season, their owner faces hard decisions on how to finance his share of a planned new stadium for the English soccer team that Gillett co-owns with fellow sports magnate Tom Hicks. The pair must come up with an estimated $550-million to pay for a new, 71,000-seat stadium in Liverpool, while at the same time keeping bankers happy.

As potential buyers circle the Canadiens and the Bell Centre arena — there are reportedly at least four interested groups, two from outside Quebec — sources close to Gillett say that, by this summer, he is likely to sell the Montreal franchise he purchased in 2001 and focus his attention on Liverpool.

And while Gillett has consistently said any deal involving the storied NHL franchise and the Bell Centre will be based on "estate planning," financial sources say the 70-year-old entrepreneur faces a financial squeeze, and is being pressed by his banks to pay down personal debts.

 "The best asset to save is Liverpool, because there's probably more upside to Liverpool than any other sports franchise on the planet," said one executive familiar with Gillett's business affairs. "It is an incredible asset with fans all over the world, and it really hasn't been commercialized the way Manchester United has been, let alone the way we commercialize things in North America."

Forbes magazine pegs Manchester United as the world's most valuable sports franchise, at $1.9-billion (all currency U.S., unless noted). Liverpool ranks as the No. 5 soccer side, worth an estimated $1-billion.

"George's holdings are like his children, he'd be reluctant to give anything up, but the Canadiens are the easiest franchise to sell," said another source working with a group that is bidding for the team. Hicks, owner of the NHL's Dallas Stars and the Texas Rangers baseball team, is attempting to rework his own finances, and failed to make interest payments on loans last week as part of a stare-down with bankers.

There are at least two Quebec-based groups interested in the Canadiens and their arena. There is a loose consortium of bidders that includes Quebecor Inc. boss Pierre Karl Péladeau and the cheese-making Saputo family, and a second group fronted by Serge Savard, former general manager of the team.

Quebec and Montreal politicians are being pitched on a plan to give an edge to local buyers by offering property tax concessions on the Bell Centre, tax breaks that Gillett has unsuccessfully sought in the past.

In addition, sources say the franchise has attracted the interest of at least two out-of-province bidders, one from Ontario, another from the United States. None of these owners contemplate moving the team.


--- Quote from: allpool on April 24, 2009, 07:51:00 am ---Liverpool owners meet with bank officials
24 Apr, 09 | England | Clubs ownership & management

Tags: liverpool |
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 According to reports, George Gillett and Tom Hicks attended a bank meeting earlier this week, to discuss the GBP 350 million loan due to expire in just three short months.

As noted by the Daily Express, English Liverpool owners met with representatives from the Royal Bank of Scotland a couple of days ago, talking business from the Anfield stadium grounds.

While Gillett and Hicks have been hoping to renegotiate the terms of the loan, sources suggest that the Royal Bank will request further investment from the American pair. Economic circumstances will no doubt have some bearing on the path Gillett and Hicks choose to take, should the bank make such a demand.

Gillett and Hicks have been placed under scrutiny for quite some time, with a possible takeover lurking in the shadows for several months now. With the economy putting pressure on a few of Gillett’s assets, rumours have indicated that the businessman may even be forced to opt out of his share of the Montreal Canadiens.

Also present in the director’s box during the meeting was English manager Stuart Pearce, who was visiting Anfield stadium as a scout. With immaculate timing, England’s own Theo Walcott played a great game in Pearce’s presence, a move that may very well pay off down the road

--- End quote ---

Liverpool owners deny talks over Indian investment
Sources close to Tom Hicks insist Liverpool are not in discussions with the Indian billionaire Grandhi Mallikarjun Rao’s GMR group over either investing in the club or buying out the Texan and his co-owner, George Gillett.
By Rory Smith
Last Updated: 7:43AM BST 27 Apr 2009

A representative of the group, which owns the Delhi Daredevils IPL franchise, was present in the directors’ box for last Tuesday’s 4-4 draw with Arsenal but it is believed no talks have been held over possible investment in Liverpool.

Hicks and Gillett are due to repay a £350 million loan from RBS and the US bank Wachovia in July and are thought to have been in constant dialogue with both banks since January over ways to manage the debt, which include putting more personal equity into the club or paying off a slice of the loan.

Both men are looking for minority investors in their sports franchises, but have struggled to raise interest in the current climate, while City sources suggest any party able to finance a takeover at Anfield is likely to wait until the July deadline is imminent to ensure the best possible price.

Hicks, who has said he is looking for new partners to invest in Liverpool from the Middle East, and Gillett have been assessing their personal financial situations amid the global economic crisis.

Both men were at Anfield last week to watch the 4-4 draw with Arsenal, a game also attended by Amanda Staveley, who was the chief negotiator for last year's failed takeover bid by Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum.

Staveley negotiated the Abu Dhabi United Group's buyout of Manchester City in September.


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