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Liverpool owners drop court case against sale

- Associated Press - Friday, October 15, 2010

LONDON (AP) - Liverpool's American owners dropped their Texas court case against the sale of the club on Friday, removing a major obstacle to a takeover by the parent company of the Boston Red Sox. But they vowed to pursue a $1.6 billion damages claim over what they called the "illegal" buyout.

Tom Hicks and George Gillett Jr. announced they had withdrawn the temporary restraining order they obtained in Dallas to block the $476 million sale.

The move could allow the club to complete the deal with New England Sports Ventures. Funds need to be transferred Friday afternoon to Royal Bank of Scotland, which holds the bulk of Liverpool's debt.

Attorneys for Hicks and Gillett, who claim the NESV offer undervalues the 18-time English champions, called the prospective sale an "extraordinary swindle."

"This outcome not only devalues the club but it also will result in long-term uncertainty for the fans, players and everyone who loves this sport because all legal recourses will be pursued," said Steve Stodghill, the Texas attorney representing Hicks and Gillett. "Mr. Hicks and Mr. Gillett pledged to pay the debt to RBS so that the Club could avoid administration that was threatened by RBS. That offer was rejected.

"It is a tragic development that others will claim as a victory. This means it won't be resolved the way it should be resolved. My clients worked tirelessly to resolve these issues but RBS would not listen to any reasonable solution and the directors acted selfishly and illegally."

The statement said Hicks and Gillett would apply "all of their legal energies" toward securing $1.6 billion in damages.

John Henry, the financier who heads NESV, had indicated he feared a late intervention from American hedge fund Mill Financial to help Hicks and Gillett Jr. prevent the sale.

Henry arrived Friday at the London law firm where the English club directors were meeting.

"We have a binding contract," Henry posted earlier on Twitter. "Will fight Mill Hicks Gillett attempt to keep club today. Their last desperate attempt to entrench their regime."

The Premier League has already approved the prospective NESV takeover.

Amid the takeover turmoil, Liverpool is mired in the relegation zone after its worst start to a league season since 1953.

The Premier League refused a request from Mill Financial on Thursday to be approved as "fit and proper" to own or become directors of Liverpool. The league told the Mill group that only Liverpool's board can ask the league to approve a potential owner.

Mill Financial has technically already taken control of Gillett's 50 percent stake after he defaulted on the loan used to fund his part of the leveraged takeover in 2007.

It was revealed in a High Court hearing in London this week that Mill Financial itself is interested in taking over the club, offering to repay more than $449 million of debt to Royal Bank of Scotland by Friday's nominal deadline to meet those liabilities and penalty charges.

But NESV could go to the High Court in London to enforce the binding agreement it has already signed with the three English board members who can outvote Hicks and Gillett 3-2.

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Associated Press Writer Schuyler Dixon in Dallas contributed to this report.

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