The Rough Guide to the Thai Take Away
Posted by Rushian on May 11, 2004, 06:37:08 AM
With reports of a possible massive investment in LFC by the Thai PM flying back and fore over the internet, newspapers and media sources, things are pretty confusing for many fans.
We've spoken to a lot of Reds today and there's a whole range of emotions at play. Distrust of anything new or considered "exotic". Wariness at the Amnesty International reports on Thailand under the Prime Minister Thaksin Shinawatra (though as has been pointed out the UK doesn't brush up too well on this front with Amnesty). There's also a preference among some to see a local man in Steve Morgan invest in the club (though serious concerns over his views on a ground share remain). Some fans are happy just as we are, and don't want to see us go down a share issue route.
It has become apparent that no one knows exactly what is going on because of the slow drip drip feed of details we're getting from both the club and the other side of the globe. So we thought we'd try and clarify a few issues.
We think it is safe to assume that the money mentioned in all the reports (anything between £55m and £75m) will come from investment in unissued shares in the club, not from the purchase of shares currently owned by any individual or group. This is an important distinction. Funds paid for unissued shares go into the LFC bank account. Money paid for currently owned shares goes directly to the seller - be it David Moores, Granada, Steve Morgan etc
According to the latest accounts there are 50,000 authorised ordinary shares in LFC. However only 34,823 of these are allotted, issued and fully paid-up shares. If the Board so chooses it can authorise the issue of the 15,177 unallotted shares (30.3% of the overall number of shares), at an agreed price, and the money will then go to LFC not any individual. This would reduce David Moores shareholding to around 36% and still leave him as the largest shareholder.
Our best guess would be LFC would issue most of these 15000 shares, say 13000, leaving the Thai investment around 27-28% and Moores at 38-39%.
Granada's investment is 9.9% and is pegged at this amount by rules governing media ownership of football clubs which were formulated after Sky's attempted takeover of Manchester United . It's been rumoured for a number of months that Granada want to dump both their Liverpool and Arsenal investments (they own 9.9% of each club). However there are joint merchandising and commercial deals set up between LFC and Granada (dvds, videos etc), described as a strategic partnership, and there's also Granada's 50% share of liverpoolfc.tv to consider. When Moores sold those shares to Granada there were almost certainly restrictions applied as regards voting rights, the disentanglement of the commercial deals if needed and who the shares could be sold to in the future.
Steve Morgan owns around 5.2% and sources we have contacted today suggest that he hasn't approached Granada to buy these shares. Morgan's offer to underwrite a 50m share issue was turned down by Liverpool in the first instant (as revealed in a statement issued on behalf Morgan by Active PR), and is believed to have come with certain strings attached that the club felt were unpalatable.
Rick Parry's brief statement on the official site yesterday suggests the current Thai talks are just one of a few options the club at looking at (along with Hawkpoint Partners who have been appointed to advise on the financial future of the club). Parry was also in the States the other week on a long business trip which hasn't received much publicity but we believe may also be connected to future financial investment opportunities.
Other issues to consider. The club will almost certainly have to call an EGM to authorise a share issue. With David Moores owning 51% of the shares the issue will be obviously be approved but the meeting may become the focus of protests. There's also questions as to who exactly the Thai funding is coming from. Is it all from Thaksin Shinawatra and his Shinawatra Computer and Communications Group? Does the Thai Government intend to invest some money? Will one of the other investors be Charoen Sirivadhanabhakdi, owner of Beer Thai? This may cause problems as Beer Thai is the producer of Chang Beer and Chang and Carlsberg (our current sponsors whose deal runs out in 2005) have been in serious dispute over a previous joint venture and are said to be suing Carlsberg for $2 billion.
There's also a question of what the Thai's will get from Liverpool. It's been suggested we will build and run an Academy in Thailand - who pays for the capital and running costs? Will we give merchandising rights for Thailand and South East Asia to the investors? There's also been talk of using Liverpool as a brand for Thai products.
If an investment of 65m is made, it's clear a large proportion of the money will be invested into the new stadium (if we ever get planning permission!) so "only" 30m will be added to the summer transfer pot. this will of course disappoint many who have been playing Championship Manager since the news filtered out, but has to be seen as the sensible option for the club.
To explain this further (all figures are indicative), we are intending to borrow 85m (plus interest) for the stadium to be paid off over 15 years at, say, 7m a year. The increase in capacity of 16000 brings in proposed extra revenues of 12m a year based on ticket sales, merchandise, corporate hospitality and food and drink. So after paying off our loan we get an extra 5m a year for the transfer pot over what we already have at the present Anfield site, and this revenue will kick in as soon as we move to Stanley Park.
Now if we invested 35m into the stadium from any share issue, we'd only have to pay back 50m plus interest. Now we could pay this back over the same time period paying say 4.5m a year, and thus benefitting in extra revenue by 7.5m a year. Or we could choose to pay off the loan at 7m a year but over a shorter time period and get the full benefit of the new stadium after just 8 years.
That's the situation as we see it currently. If you have any questions you can email us at:email@example.com
Independent Liverpool Supporters Associationhttp://www.ilsa.org.uk/
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