Liverpool FC owner George Gillett agrees to sell up to DIC

Mar 8 2008

LIVERPOOL FC co-owner George Gillett last night agreed to sell his share in the club to Dubai International Capital.

The breakthrough came after DIC agreed to top up Gillett’s profit on his LFC investment from an instant £40m to a potential £80m, depending on future club success.

Crucially the terms of the deal would see 1% of Gillett’s holding in the club go to his American co-owner Tom Hicks for around £500,000, making the Texan the club’s majority shareholder.

DIC, owned by Sheikh Mohammed Al Maktoum, would agree to take on the £350m debt arranged by the Americans in a controversial re-financing deal earlier this year.

Last night’s agreement would value Liverpool FC at £430m, rising to a maximum £510m if the future profit sharing clauses were triggered.

The potential additional £40m Gillett could look forward to is contingent on Liverpool’s success both on the field and in financial terms – agreed targets would have to be hit. Lawyers are yet to thrash out the finer details of the deal which will now become dependent on the agreement of Tom Hicks.

Last night Amanda Staveley, of private equity group PCP who is representing DIC, said the company was willing to accept the minority holding at Anfield subject to certain conditions.

She said: “Subject to re-negotiation of a partnership agreement and subject to the usual stringent minority shareholder protection rights, we would be prepared to accept a 49% shareholding in Liverpool Football Club.

“We have decided this arrangement provides the best possible solution to the situation and would be in the interests of the club and their loyal fans.”

Gillett’s willingness to sell is a major step forward in concluding the power struggle which has so unsettled the Anfield club.

But fans will no doubt be concerned that Hicks, the leading target for their anger, would actually appear to be about to strengthen his hold at Anfield.

Last night George Gillett declined to comment on any agreement with DIC.

But one source stressed that the deal was “far from done” as Hicks will have to be convinced he can work with the Dubai consortium.

It is understood representatives of Hicks, stationed in Dubai, will meet with DIC next week for talks.

The valuation of the club has been the main sticking point in the potential sale, with the Americans previously insisting the club was worth up to £1bn.

The ability of the Americans to invest in the club, especially the new 71,000 seater stadium on Stanley Park, has been questioned following the £350m re-finacing of debt on the club.

The new stadium is an essential part of future profit projections, and the Americans have already had to order one re-design because of rising costs.

Allowing Gillett to have a slice of profits in future was seen as a way of wrestling his stake from his hands while allowing him share proceeds in years to come.

DIC are understood to be keen to get a “foot in the door”, opening up the possibility of buying out Hicks later.

However, sources close to the Texan last night said he had ”other options and other partners” to take a minority stake in the club if agreement could not be reached with DIC.

Hicks believes he and Gillett effectively have a veto over the other should either decide to sell their stake and has made it clear he is prepared to use his veto.

The relationship between the pair has soured in recent months, to such an extent whereby the pair hardly talk now.

Gillett was originally seen as the senior partner in the relationship, bringing in Hicks with his financial muscle in order to outbid DIC for ownership last year.

However, Gillett was angered by Hicks’s public admission that Jurgen Klinsmann had been lined up as a potential replacement for manager Rafael Benitez.

When Hicks announced the controversial £350m refinancing deal in January, Gillett was so annoyed that he refused to put his name to the statement.

The pair bought LFC through their Kop Holdings Group in February last year but their “dream ticket” became a nightmare for fans when they loaded the club with debt.