LIVERPOOL FC: £105m debt placed on club by Americans

Jan 26 2008

KOP Holdings last night said the new £350m finance deal will meet all the club’s current cash needs and provide money to kick start the new stadium project.

As was widely expected, £105m of the debt has been placed on the club and will be used to fund the start of construction of the new stadium at Stanley Park (£60m), for future player transfers, and to meet the club’s working capital needs.

The rest of the £245m loan in the deal with Royal Bank of Scotland and US investment bank Wachovia will be placed on the holding company, Kop.

Kop said that overall financing was supported by a combination of owner cash, understood to be in excess of £40m, letters of credit and personal guarantees totalling £225m of collateral.

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About £60m of debt was on the club’s books when Gillett and Hicks bought the club last February.

The banks are understood to be satisfied that Liverpool’s earnings from gates, TV rights, sponsorship and cash from the Champions League can service its part of the debt.

It has not been explained how the debt on Kop Holdings will be serviced, but it could mean that Liverpool FC for the first time in its history pays dividends to its owners.

Those dividends would then be used to pay off the debt.