Liverpool fans are on a cautious high at the moment - it finally looks like Tom Hicks and George Gillett may be ousted from the club; a dreaded points deduction is off the table (it is! Don't believe the press); and new owners are waiting in the wings to take over. However, at this stage, the sale is merely pending - there is a major legal conflict to overcome, and having examined the legal document that Liverpool Chairman Martin Broughton is using to validate the sale, I have to say that things are not as cut and dried as they seem.
* A Board meeting was called for Tuesday 5th October to examine two bids.
* Broughton, Purslow and Ayre gathered for the meeting at the offices of Solicitors Slaughter & May, beginning at 3:30pm.
* 15 minutes before the meeting was due to convene, a faxed notification was received from Hicks stating that that Purslow and Ayre were fired, and that they were to be replaced with Hicks' son Mack and, his assistant, Lori Kay McCutcheon.
* With Hicks Jr. and McCutcheon on board, Hicks would have the voting power to veto the sale.
* After taking legal advice, Broughton decided that Hicks did not have the right to change the board, and restarted the meeting.
* Hicks declined to take further part in the meeting. Broughton, Ayre and Purslow proceeded to approve the sale to NESV, and decided to a declaration from a high-court judge that the way they proceeded was legal.
BROUGHTON'S ARGUMENT
* He was the only person entitled to make changes the LFC board of directors.
* That power was written into the articles of the covenants.
* Hicks and Gillett agreed that they would take no action to frustrate any reasonable sale.
* Hicks and Gillett gave written undertakings to RBS, one of which was agreeing to point that Broughton has sole power to change the board.
HICKS' ARGUMENT
* He did not agree that Broughton would be the only person granted authority to change the board.
* He had the legal right to sack Purslow and Ayres, and bring two Directors on board (thus giving him a majority).
* He has a duty to the club's shareholders to pursue the best price for the club.
* The price on the table from NESV is not good value for the club or its shareholders.
What’s likely to happen?
It is by no means a foregone conclusion that the sale will go through, and it is entirely possible that the high Court will rule in favour of Hicks and Gillett. Indeed, Broughton himself cannot guarantee that the sale will go through, as he indicated in a recent comment:
"I think we'll get there, but I can't make a promise. If the case goes against us, we do have a fallback position, but we're not prepared to discuss this at present."
Even if Hicks get the ruling, unless they find the money to repay the RBS loans, their holding company – Kop Football Ltd – will go into administration. RBS will then sell the club, and the end result will (probably) be the same: NESV as owners.
The worst case scenario is that Hicks and Gillett have already found someone to fund their refinancing deal and/or they're willing to put in their own money in. Given the zeal with which they’re trying to veto the NESV deal, that possibility shouldn’t be discounted.
If the High Court rules in Hicks’s favour, the sacking of Purslow and Ayres will be duly ratified ; Hicks’ two new board members will stay, giving him a majority; the board will then reject the NESV bid; the RBS loans may be refinanced, and Hicks will hang on a little longer for a bigger deal.
Nobody wants this to happen, and to be honest, I don’t really think it will. Article 81 will probably be interpreted in Broughton's favour, even if it's not as clear as it could be. However, the law gets it wrong sometimes (!), so fans should prepare themselves for the worst case scenario ... just in case !
IT'S JOE COLE I FEEL SORRY FOR .......... [cough]
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