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Blackstone’s GSO joins Hicks in bid to keep Liverpool FC

20 Sep 2010

GSO Capital Partners, the credit arm of US private equity firm Blackstone, is in talks with Tom Hicks, co-owner of UK football club Liverpool FC, as a partner in his bid to retain control of the team, according to reports.

Hicks and co-owner George Gillett Jr had reportedly put the club up for sale in April this year, claiming they lacked the funds to carry the team forward, particularly in view of its £237 (€282.1m) debt load. However, a lack of offers for the club has led the Texan businessman to assemble his own financing deal.

GSO has reportedly offered Hicks £280m (€333.3m) in funding over two years, just weeks ahead of the October deadline for the owners to repay Liverpool’s debt to RBS.

Relationships between Hicks and the Liverpool board of directors have been adversarial, exacerbated by an incident in June when it rejected a refinancing proposal from Gillett and took legal advice before doing so.

Blackstone’s funding would allow Hicks to take full control of the club, pay off a significant portion of debt and provide funds for players, as well as diluting Gillett’s 50 per cent stake. It would also give Hicks until 2012 to sell Liverpool and find an investor willing to match his valuation of £600m (€714.2m)

Hicks’ and Gillett’s stewardship has attracted strong opposition from some Liverpool fans, led by supporters’ union Spirit of Shankly, who have scheduled an emergency general meeting this Saturday ahead of two days of protest against the duo. According to the Financial Times, any proposal allowing the two American owners to retain all or part of their stakes would not be acceptable to the independent board members.

Blackstone acquired GSO in January 2008 for an agreed price of up to $930m. The alternative asset manager has a multi-strategy credit hedge fund, a mezzanine fund, a senior debt fund and various collateralised loan obligation (CLO) vehicles. It recently closed its latest fund on $3.25bn.

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