From Bloomberg and then the Daily Telegraph

Tom Hicks’s agreement with Liverpool Football Club’s lenders to refinance debt shows the efforts European lenders are prepared to take to prevent highly leveraged companies from defaulting.

The U.S. private equity executive, who bought the northern English soccer team in 2007 with fellow citizen George Gillett Jr., agreed in July to repay a fifth of its 290 million-pound ($478 million) debt in return for Royal Bank of Scotland Group Plc and Wachovia Corp. refinancing the rest of the loan, according to data compiled by Bloomberg. In the U.S., Hicks is facing more aggressive creditors at the Texas Rangers: lenders declared the baseball team owner in default after it missed interest payments on $525 million in loans in April.

Liverpool joins companies from Materis SA, a French maker of building materials, to Wiesbaden, Germany-based Kion Group GmbH, the world’s second-biggest forklift maker, that are being given extensions to their debt or looser loan covenants to avert default and, therefore, writedowns for their lenders. In Europe, 23 billion euros ($34 billion) of high-risk, high-yield debt, including buyout loans, was refinanced or extended in the first half, compared with 7 billion euros in all of 2008, according to Standard & Poor’s Leveraged Commentary & Data unit.

“After receiving money from the taxpayers, European banks can’t afford to report more losses and ask for more capital,” said Gareth Davies, head of a team at London-based Close Brothers Group Plc that advises companies on restructuring their debt. “European lenders have taken some provisions, but they are certainly not sufficient. Taking adequate loan provisions means some would have to get more funding or go bust.”

Hicks, 63, who co-founded the U.S. LBO firm Hicks, Muse, Tate & Furst in 1989, said in May he may sell a controlling stake in the Texas Rangers, which he bought in January 1998 for $250 million from a group headed by former President George W. Bush. Jonathon Brill, a spokesman for Hicks and Gillett, declined to comment.






Meanwhile, Hicks has instructed Merrill Lynch to entice a minority shareholder to Anfield with an asking price of £100m for a 25% stake. Hicks and his fellow co-owner, George Gillett, have been seeking new investment of varying forms for almost two years and the US financial management company was employed to carry out that task by Hicks last year. It is understood the firm is now targeting businesses or wealthy individuals in the Middle East who would be prepared to buy a minority stake, allowing the Americans Hicks and Gillett to retain majority control.

The co-owners value the club at £500m, despite postponing the proposed new stadium indefinitely in the current economic climate, but a minority shareholding would come at a discount.

Despite a controversial and often fraught tenure, Hicks and Gillett remain intent on bringing the stadium proposals to fruition and recently extended their refinancing package on the club to July 2010. Their reign continues to attract fierce protests from Liverpool supporters and the Spirit of Shankly group, which held an EGM on Saturday to discuss intensifying its campaign against the Americans, met the club's managing director, Christian Purslow, to reinforce its concerns before last night's Champions League game against Debrecen.

Unusually Hicks, Gillett and Purslow have all gone public in the past week with messages on the improved health of Liverpool's finances. This follows the biggest commercial agreement in the club's history, a four-year shirt sponsorship deal with Standard Chartered bank, which is believed to be worth £20m a year.

Hicks vowed to continue reducing Liverpool's debt, which is scheduled to decrease by £60m to £250m under the terms of the latest refinancing deal with the Royal Bank of Scotland and Wachovia, and revealed that an arrangement with Carlsberg will continue to bring around £6m a year into the club when the brewer's deal as main sponsor ends next summer.

The Texan also claimed there is new-found stability at Anfield. "I think the management situation at the club has dramatically improved. There is a real sense of optimism," he said. Hicks also championed Liverpool's value as a global brand with a history of success, while dismissing the spending of the Abu Dhabi-backed Manchester City as "not sustainable".

Gillett went on record at the weekend to state that: "The club is in outstanding shape. Economically, it's never been stronger. We just paid down our debt very substantially. We have less debt per dollar than any club in the league."

Liverpool posted a record turnover of £159.1m for the year ending July 2008 but the club's parent company, Kop Football (Holdings) Limited, suffered a £42.6m loss for the same period.