Moores stands in way of Liverpool FC bid

Dubai International Capital, one of the investment vehicles of the Dubai government, is leading the race to buy Britain’s Liverpool Football Club – but several problems could yet stall the deal.

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By  Frank Kane Published  December 10, 2006

Dubai International Capital, one of the investment vehicles of the Dubai government, is leading the race to buy Britain’s Liverpool Football Club – but several problems could yet stall the deal. DIC executives travelled to Britain last week to meet with their Liverpool counterparts and advisers to try to resolve the tricky position of David Moores, the Liverpool chairman, who has a 51% shareholding. Both Liverpool, controlled for decades by the Moores family, and DIC confirmed last week they were in exclusive talks about a financial package to take control of the debt-laden club, which is still regarded as one of the great brand names in international sport. DIC chief executive Sameer Al-Ansari said: “We will be commencing due diligence in the coming days and continuing discussions with Liverpool which may or may not lead to a formal offer. “We are supporters – of the game and of the club,” he added. “Liverpool’s investment requirements have been well-publicised and we hope we can agree a deal that will provide the club with the funds it needs, both on and off the pitch.” The prospects of a deal were also talked up by Liverpool chief executive Rick Parry: “This is the latest step on the road of finding the long-term investment that the club needs,” he said. “This is very important in terms of the proposed new stadium, which is key to plans for the regeneration of the local community. “On the pitch, Liverpool remains focused on winning and, here again, this is all about doing a deal that gives us the long-term resources to do that,” Parry added. But sources close to the negotiations between the two sides do not think a deal is close to being tied up, and suggest it may take until next year to complete the due diligence process. The Reds’ cash needs are urgent and apparent. With some US$157m of bank debt and another US$393m the estimated cost of a new stadium, the club needs a financial injection to allow it to compete at the top level of the European game. It has been noticeably falling behind well-financed clubs like Chelsea and Manchester United in recent years. DIC is willing to invest around US$884m, but advisers believe there is as yet no agreement on a central issue, which could still derail the deal: the value put on his controlling 51% per cent stake by chairman David Moores. Liverpool shares are not traded on an official stock market, but the most recent transactions have valued them at US$6485 each, valuing the clubs share capital at around US$226m. Moores is thought to have asked DIC for at least US$8845 a share, to reflect a takeover premium for his stake. Dubai's DIC believes this money would be better spent on investment in the new stadium and players. “It is an issue which will have to be successfully negotiated,” said a Dubai adviser. “If he [Moores] holds out for too much he might just negate the benefits of the deal.” Also under discussion are the other major shareholders in the club. Businessman Steve Morgan – who has been critical of the Moores regime in the past – has around 10%, while broadcaster ITV has a similar stake, inherited from the old Granada television group. Moores’ uncompromising stand on price has been a stumbling block in the past. George Gillett, owner of the Montreal Canadiens ice-hockey team, proposed a similar deal to DIC’s earlier this year, only to have it knocked back by Moores' determination to get full value for his shares. One possible compromise would see DIC buying a minority, but controlling, stake and investing capital directly into the new stadium. Moores would remain a shareholder, possibly with an honourary position at the club. “If he stays on it might make Liverpudlians more comfortable about the new owners,” said one adviser. However, this arrangement is unlikely to comfort DIC, which has a track record of seeking full control for most of its other investments, like the Tussauds waxworks tourist attraction and the Travelodge hotel chain.

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