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MAY 14
How
Steve Morgan tried to take control
Business Editor Bill Gleeson reports on the entrepreneur's
attempt to invest in Liverpool FC
Liverpool's board yesterday rejected Steve Morgan's offer to invest
£73m in the Anfield team on the grounds that it undervalued the club.
At first sight, this statement is at odds with the fact that the
Jersey-based entrepreneur has offered more cash than the £60m rival bid
from Thai Prime Minister Thaksin Shinawatra.
But reading between the lines of Liverpool's statement yesterday evening,
the crucial difference between the two bidders is that Mr Morgan is
angling for majority control of the club. Thaksin's proposal, on the other
hand, would still leave club chairman David Moores as the largest single
shareholder.
At a press conference on Wednesday morning, Mr Morgan said that if
Liverpool accepted his proposal he would only want a seat on the club's
board in return for the new money. He made no mention of ending up with a
majority stake, but that appears to be what he really wants.
Mr Morgan proposed that £61m be raised through a rights issue and another
£12m raised from a separate issue of shares to fans.
Under a rights issue, companies raise new capital by issuing more shares.
A rights issue gives existing shareholders the right to have first refusal
to buy the new shares in proportion to the number of existing shares that
they already own.
This allows shareholders who take up their rights to keep the same
percentage stake in the business. Those that don't take up their rights
will see their ownership of the business diluted.
Crucial to understanding the implications of Mr Morgan's now rejected
offer is the line in last night's statement from Liverpool that reads:
"The proposal . . . implies a current value of £61m for the entire club."
Combining this information with disclosures made by Mr Morgan at his
Wednesday press conference, it is possible to piece together the essential
details of his offer.
According to Mr Morgan, the rights issue was to raise £61m. According to
the club's statement, his offer valued the existing shares at £61m. In
other words the existing shares and the new shares from the rights issue
are equal in number. Therefore Mr Morgan was proposing the new shares
would represent half of the expanded share capital of Liverpool FC.
He appears to have been gambling that both David Moores and Granada, which
own 9.9% of the club, would turn down the opportunity to take up their new
shares. He would then be the only person able to afford to shell out £61m
for the rights issue shares.
That would leave him owning half the club from the rights issue alone,
which could then be combined with another 5% of the shares he already
owns. This way, Mr Morgan would end up with approximately 55% of the club,
leaving David Moores with about 25% and Granada just under 5%.
Thaksin, on the other hand, wants just 30pc as part of a deal that would
leave David Moores with 36%.
James Dow, a football finance expert who has previously advised Everton
and Barcelona, said: "He decided he wanted to top the Thai offer in terms
of putting more money into the club, but only in return for a higher
proportion of the equity.
"By using a rights issue, he was also challenging David Moores to put in
his own money, because Moores would have been entitled to maintain his
stake. He was basically saying that if Moores thinks his rights issue
undervalued the club, he shouldn't have any trouble taking up his shares."
The fact is that David Moores has not invested money in the club for many
years. Four years ago, he relinquished equity in the club to allow Granada
to acquire its stake in return for £20m.
Another observer commented: "It's not unusual for rights issues to value a
company below the board's valuation as the aim is to bring in new
investors.
"I suspect the subtext here is Liver-pool don't want to do business with
Mr Morgan. It's hard to see how he and David Moores could work together."
And the only losers from Mr Morgan's offer are David Moores and Granada.
The property tycoon's plan would result in more money for the team manager
to spend on players than would come from Thaksin's proposal.
It is plain from the statement the club has not shut the door completely
on Mr Morgan, indicating it wanted to carry on talking. There is
undoubtedly a great deal of negotiating left to do.
Who's who on the Liverpool
board
David Moores
With a 51.46% controlling interest, the chairman holds 17.923 of the
34.823 issued shares. This means the decision to accept either of the two
proposals lies solely with him.
Terry Smith
A former journalist who built up commercial station Radio City before
selling out to Emap. A close friend of Moores, he holds 264 shares.
Noel White
Former chairman at Anfield before Moores succeeded him in 1991. A retired
hotelier and FA international committee chairman, White holds 223 shares.
Keith Clayton
An accountant who accompanied Rick Parry to Bangkok for discussions with
the Prime Minister. The 25 shares he holds are as a nominee for Moores.
Rick Parry
Named chief executive of the club he supported as a boy when he left for a
similar role at the Premier League. Parry holds 12 shares, 10 as a nominee
for Moores.
Jules Burns
Joined the board as Granada's representative when they took a 9.9% stake.
No longer with Granada and holding no shares, he remains a director.
John Cresswell
Succeeded Burns as the representative of Granada in September 2003. He may
try to influence Moores to accept one or the other.
Les Wheatley
Director of finance, a position he previously held with Newcastle United.
An executive director, he holds no shares.
MAY 13
Morgan:
Rejection doesn't make sense
Ananova
Steve Morgan admitted he was baffled at Liverpool's decision to reject
his proposal to inject £73million into the club.
But the self-made property magnate refused to reveal what his next move
might be, if any.
The Liverpool directors claimed Morgan's plan was "unattractive" and
didn't represent the true value of the club.
A spokesperson on behalf of Morgan said: "The board's response doesn't
seem to make sense.
"Mr Morgan's proposal is to underwrite the investment of £73million into
LFC, not to buy the club.
"Under his proposal, the investment would be open to all shareholders,
including the board.
"In addition, the ordinary supporters would, for the first time, be able
to buy a share in the club.
"Mr Morgan's offer merely underwrites the proposal, thereby guaranteeing
that £73million will be made available to the club.
"What matters to Liverpool Football Club is how much money they have
available, as soon as possible, to strengthen their squad and fund the
stadium."
MAY 13
Reds not keen on
Morgan bid
By Paul Higham - Sky Sports
Local businessman Steve Morgan's offer to invest in Liverpool looks
like being unsuccessful after the club described it as 'not attractive'.
Morgan had launched a second attempt to invest in Liverpool after Thailand
prime minister Thaksin Shinawatra had looked to seal a deal to buy 30
percent of the club.
Local building magnate Morgan had offered to underwrite a shares issue in
a total package worth £73 million to the Anfield outfit.
Reds chairman David Moores held a board meeting at Anfield on Thursday and
after lengthy discussions, they came to the conclusion that Morgan's bid
was not attractive to them.
"Liverpool Football Club confirms that it has received two indicative
proposals for investment in the club, the Thai Investment Proposal and the
Bridgemere Proposal backed by Mr Steve Morgan," read a statement on the
club's official website.
"The board of Liverpool Football Club has today met with its financial
advisors, Hawkpoint Partners, to consider these proposals.
"The board notes that the Bridgemere Proposal, at £1,750 per share,
implies a current value of £61 million for the entire club, which is a
substantial discount to the value placed on the club by the board.
"The board has therefore concluded that the Bridgemere Proposal, as
currently constituted, is not attractive. It intends to discuss its
response to both these proposals with the respective parties.
"A further announcement will be made in due course."
Although the door has not been totally closed on Morgan, the comments
suggest that he may need to come back with an even bigger offer to stand a
chance.
Morgan's frosty relationship with Moores could well be a major sticking
point, along with his desire to get a foothold on the board himself.
Reds fans have been massively in favour of Morgan investing in the club
while they remain sceptical about an offer from abroad.
Accepting the Thai offer above local money may not go down too well with
the Anfield faithful, but it still remains to be seen which way the club's
powerbrokers will go.
MAY 12
Fight for
Liverpool gets serious
By Dominic Fifield - The Guardian
The power struggle within Anfield intensified last night as Steve
Morgan, Liverpool's third largest shareholder, launched a
counter-offensive in an attempt to deflect a potential investment in the
club by the controversial prime minister of Thailand Thaksin Shinawatra.
Morgan's proposal would see him inject up to £73m into the Premiership
club, leaving the chairman David Moores, with whom he has endured a
fractious relationship, facing a stark choice this morning which will
shape Liverpool's future. Moores can either accept Thaksin's £56.5m offer,
ignoring Thailand's dubious human rights record, or welcome his long-time
adversary on to the board.
The club's chief executive Rick Parry was returning last night from
constructive talks in Thailand, though supporters back on Merseyside are
swaying towards Morgan, largely because the 51-year-old is seen as one of
them. The Jersey-based founder of Redrow Homes, who boasts an estimated
fortune of £312m and a 5% stake in the club, hand-delivered his proposal
to Anfield yesterday.
He is offering to underwrite a rights issue worth £61m via his company
Bridgemere Investments Ltd. This would be backed by a new shares issue, to
be directed at fans, aimed at raising a further £12m. The rights issue
would be open to all shareholders including the chairman, crucially
offering Moores the chance to add to his current 51% stake and ensure he
remains the major - if not necessarily the majority - shareholder at the
club. In return, Morgan would expect the place on the board long denied
him at Anfield.
"In my view, the future of Liverpool Football Club is best served by the
people who love the club the most, its supporters, of whom I am proud to
be one," said Morgan, who will detail more of his plans at a press
conference this morning.
"This proposal will not only keep ownership of the club with its
supporters, where it rightfully belongs, it will also inject £73m of new
capital to strengthen the playing squad and help finance the proposed new
stadium."
"In addition, the club's commercial rights to Asia and indeed any other
part of the world would remain where they belong - in the owner ship of
the club. This would enable LFC alone to benefit from the use of these
rights, which is essential to generate future income."
Parry, accompanied by the director Keith Clayton and Ben Mingay of the
financial advisers Hawkpoint Partners Ltd, is due to arrive back from
Bangkok today, with Thaksin still convinced that his own £56.5m proposal
for a stake of just under 30% in the club is on the verge of being agreed
after exhaustive talks.
Their initial meeting took place at Liverpool's FA Cup third-round victory
over Newcastle in January with Thaksin introduced to Liverpool by the
sports marketing company Kentaro, an agency co-founded by the former head
of IMG's global football division Philipp Grothe. Yet, four months on, it
still remains unclear whether the money required would be generated
through public funds in Thailand or via a private consortium fronted by
the prime minister.
Regardless, a groundswell of opinion is building behind Morgan - who had a
£50m proposal rejected in March with Moores unwilling to dilute his
shareholding to about 37% - not least because of pressure from
human-rights groups scrutinising Thailand's less than impressive record
under the present coalition government led by Thaksin's Thai Rak Thai
party.
A spokesperson for Amnesty International stressed yesterday: "Besides
looking at who invests in the club, Liverpool as a business have a
responsibility to ensure that any relationships with clubs or suppliers
which it develops in Thailand do not contribute to human-rights
violations."
There is also suspicion of Thaksin's intentions in buy ing into the club.
"There are a lot of fans asking: 'Who is this guy? What's his interest in
Liverpool Football Club?'" said Steve Davies of the Independent Liverpool
Supporters' Association.
"We have seen him photographed holding up a Manchester United shirt next
to Sir Alex Ferguson and now he says he's always been a Liverpool fan. We
are wary of the unknown, though most people trust Moores and Parry to do
right by the club."
That trust will be put to the test now, with Liverpool's chairman of 13
years forced to contemplate welcoming a vociferous critic of his reign
-not least at January's annual general meeting - on to the board.
"I think there is going to be a long-term fight over this," said Professor
Tom Cannon of Kingston Business School. "It might get dirty."
MAY 12
Morgan outlines
Anfield plans
Sporting Life
Liverpool manager Gerard Houllier's job would appear to be under threat
if millionaire building magnate Steve Morgan's proposal to inject
£73million into the club is successful.
Morgan, who outlined the details of his bid at a Warrington hotel, is
known to be a critic of the current Anfield boss and he refused to back
the Frenchman when offered the chance to.
And although he would not have the power to oust the manager should his
bid be accepted and his share in the club increased, Morgan - who
currently owns 5% of shares - would certainly make waves in the boardroom
about the direction Liverpool are heading in.
"It is neither the time nor the place to be discussing the future of the
manager," he said.
"I am a fan of any manager who is manager of Liverpool Football Club. His
track record over the last few signings has not been good. He has made
mistakes but haven't we all.
"The manager has had some success over the last six years but every
supporter would have been disappointed to finish fifth last year and
hopefully finishing fourth this year.
"We are closer to the bottom than to the top and that has to change. We
have got to be fighting for the Premiership [title] next year.
Thailand Prime Minister Thaksin Shinawatra is attempting to buy a 30%
share in the club for £60million but Jersey-based Morgan is determined to
keep interest in the club home-based if possible.
"None of us know the details of the bid from the Thai Prime Minister. I do
have a concern that someone who does not have the interest of the club at
heart would end up owning 30%," he said.
The businessman also revealed if his bid was accepted the majority of the
money raised would be used for improving the current playing squad but he
stressed it was important for the club to make a quick decision.
"The capital would go into two pots. I am not sure how the pot will split
but I will see the majority going to strengthening the playing squad," he
said.
"The transfer window is relatively short. The squad needs strengthening
right now. There is no point in Nero fiddling while Rome burns. We need to
get on with getting players into the club.
"It is a very easy deal to do, there are no strings attached."
The former Redrow Homes boss denied he had an issue with Anfield chairman
David Moores and claimed he was seeking to work with him, not against him.
"I think it is fair to say we have had our differences in the past as to
how the club is run but we have both got the interests of Liverpool
Football Club at heart and we share the passion of that," Morgan said.
"I have nothing personal against David at all. I disagree with some of the
policies of the club in the past but it is not a personal issue."
