A bit of conjecture:
The loan expires in late June and one of the following has to happen:
(i) RBS renew/extend it and leave the status quo as they're confident of being paid the interest
(ii) RBS renew the loan but insist on more equity being put in, thus reducing the value of the loan itself and reducing their exposure
(iii) RBS refuse to renew the loan as they do not believe it is a 'safe' investment.
Taking these in turn:
(i) Little change, this merely puts off judgement day for another 12/18 months. The club's transfer budget will be small as money is diverted to pay the interest and arrangement fees. It's also near-inevitable that RBS would require more collateral and whether Hicks or Gillett have that is questionable.
(ii) This would require additional investers, given the state of Hicks & Gillett's other investments. Thus, it might be possible to imagine a scenario where Hicks & Gillett dilute their holdings (possibly by different amounts) and either a consortium of investors or one single investor comes in alongside them.
(iii) This is the interesting option and unless new investment has been found, perhaps the most likely. However, a short-term extension of the existing loan (up to six months?) could be provided in order that the club be sold at a decent price and not expose RBS to a significant loss. There are two ways in which this could pan out:
(a) The renewal of the loan is refused because H&G are unable to provide sufficient equity, collateral or new investment. H&G are unable to renew the loan and RBS become de facto owners of the club, which they would then either sell quickly or asset-strip (sell the more valuable players) and then sell the remains. That is the nightmare scenario.
(b) Alternatively, RBS could already have indicated that they are unwilling to extend the loan and have put H&G into a situation where - unable to raise equity - they are forced to either bring in new investors or sell the club outright before the June deadline.
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My money would be on a scenario along the lines of:
Around the time that the loan was extended for 6 months (late January), RBS informed H&G that the loan would not be renewed in its current form. If they wished to continue to finance through RBS, they would need to put more money in, thus reducing the size of the loan and RBS's exposure. This is basically the same as a mortgage lender demanding a 30% deposit rather than a 10% deposit.
There would have been three primary options open to Hicks & Gillett, which would probably have been attempted simultaneously:
(i) Find a new bank who would lend them the entire amount: this was probably a non-starter.
(ii) Free up the equity from elsewhere within their groups, for example Hicks trying to sell off part of his other sports holdings. This appears to have been tried by both, but nothing has been concluded.
(iii) Attract other investors, who would put in equity in return for a stake in the club. The major issue here is that H&G's actual equity stakes are probably very small and no investor would be happy to put in a disproportionately large amount of equity for their shareholding, whilst H&G put in less equity and used the overall loan to cover the difference.
In approximate terms, if the new loan were to be £250m and the club valued at £350m, then a situation where H&G each had, say, £10m invested and were looking for two new investors to put in £40m each for a 25% share of the club, then they're simply not going to find them - fine if the new investors put in £25m each and H&G put in £25m apiece, but and disproportionate injection of equity is unlikely.
I'd guess that options (i) & (ii) were attempted, but failed quite quickly. That leaves either the option (iii) or the 'nuclear' option:
(iv) Sell the club as a going concern, preferably for more than the value of the loan, otherwise H&G stand to make a loss.
So where does that leave us?
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We know that both Hicks & Gillett were at Anfield for the Arsenal game, pretty much unannounced. The fact that both were at Anfield together is strange given their recent history and the fact that nobody seems to have expected them is a bit odd.
In addition to Hicks & Gillett, they brought a number of people with them, including Hicks's son (a Director of the club iirc) and the Chief Operating Officer of Hicks Sports Group. This again is peculiar, as there must be a reason for their presence rather than just to savour the atmosphere.
Hicks & Gillett gave a tour of the club to a couple of Arabesque gentlemen, who do not appear to have been identified. They could be either RBS employees or future investors.
Either of these is credible: RBS may well want for their executives to have a good knowledge of the club and any new investor would certainly want to know the ins and outs as well.
Yet, the people who were apparently shown around do not seem to have been identified as being in the Directors Box at the game. Again, this does not quite fit with the pattern as DIC's representatives were very obviously on display when they were looking at taking a stake.
So why would the mysterious Arabesques not have been identified so far?
If they were from RBS, it could be explained by them not wishing to put themselves up for public scrutiny by being at the game. That said, they could have been shown round the club on a non-match day by Rick Parry or Ian Ayre: it wouldn't require Hicks and Gillett to accompany them - and it probably wouldn't require the presence of all the hangers-on.
The more likely possibility, in my opinion, is that the Arabesques were some sort of investors, whether coming in as partners or taking over entirely. They would be important enough to justify the presence of Hicks & Gillett but - mindful of the media circus that surrounded DIC - they did not wish to be pictured at the match itself.
The presence of Tom Hicks Jnr etc. at the game is also a potential clue, although whilst their presence in person may be an indicator of something important, it must be remembered that required signatures can be exchanged by fax.
It would look, therefore, as if there was a very good reason for the presence of Hicks, Gillett and their respective groups at Anfield; and probably that this was related to their showing round the two Arabesques earlier in the day.
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Where that all points is just that something is happening. Whether or not it's going to be announced this week, next week; or whether it will just collapse as a number of other proposed deals have done is not something that is known outside a very few people. But in any case, the clubs's funding has to be sorted out by the end of June - and the current situation is not likely to continue.
