Quote :

Manchester United examine £600m bond issue

Ben Marlow
From The Sunday Times
January 3, 2010

SOURCE: Manchester United examine £600m bond issue - Times Online


MANCHESTER UNITED is considering a £600m bond issue as part of the Premier League club’s battle to bring its spiralling debts under control.

It is understood that the Glazer family, the American leisure tycoons who bought the club in 2005, have asked two investment banks to look at ways of easing the debt burden.

JP Morgan, the US bank that engineered the Glazers’ £790m takeover, and Deutsche Bank, have been working on options to improve the club’s financial situation amid concerns that its debts could soon have serious repercussions.

In the past few weeks, advisers have begun sounding out potential investors on a bond issue. The cash would be used to pay back some of the club’s existing debts.

Manchester United is not the only big club to face debt problems. Last week Roman Abramovich, owner of Chelsea, converted £340m in interest-free loans into equity.

Manchester United, champions for the last three years, owe about £700m to banks, financial institutions and hedge funds, according to debt specialists, Capital Structure. Most of this stems from the Glazer family’s takeover, which was criticised by fans because so much debt was being loaded on to the club.

The club insists the debt is not a problem because the annual interest on the various loans is covered by its operating profit. In 2008, net interest on all its debts was £69m against an operating profit £72m. The main concern for the club’s owners is the £175m of loans that the Americans are personally responsible for and which “roll up” interest at an annual rate of 14.25%.

The so-called payment in kind (Pik) notes borrowed from Perry Capital and Citadel, two American hedge funds, initially stood at £138m in 2006, but have since accrued £40m of unpaid interest.

If the club’s financial performance deteriorates below a certain level then the hedge funds have the right to appoint their own directors to the board.

Sources familiar with the situation say the amount that Manchester United will seek to raise depends on the appetite shown by investors. At present the figure is between £500m and £600m. If demand is strong, the club could seek more.

It is unclear whether the proceeds of a bond issue would be used to repay the controversial Pik debt or the £520m that is secured against the club. The Glazers would prefer to pay back the more costly Pik debt, but experts said any attempt to prioritise the hedge funds that lent the money would be met with stiff opposition from the club’s senior bank lenders.

Instead, bankers said that the club might look to pay off the bank debt, which is likely to have higher interest rates than the cost of the annual coupon on the bond.

The club put in place a more long-term financing structure in 2006 and has since attempted to refinance on a number of occasions but, as many British companies have found, the credit crunch and resulting economic climate have scuppered their efforts.

Fans’ groups have cast doubt on whether the world record £80m transfer fee the club received for Cristiano Ronaldo last summer will be reinvested. However, the club has said publicly that Sir Alex Ferguson, the manager, has plenty of money available to spend.

From what I've read from various places a bond is another kind of a loan with a comparatively lower interest rate. The interest rate is along the lines of 5.25% or something over the period of, in this case, say 10 years or so. What it does is, the investors lend us the 600m(not all upfront obviously) which facilitates the club to wipe of the PIK's and help us lower the interest rate (i.e. from aprrox 65-70m to some 20-25m per annum) helping the club to actually start wiping off the debt. The investors get a fixed return in terms of interest per annum(aforementioned 5.25%) and get their 600m back in ten years time(hypothetically).


In layman's term, it's like getting a new credit card to wipe of the debt and interest on your old ones with this one charging a lot less interest per year/month.


And lastly FUCK OFF Glazers, you fucking bastards!

No one interested in the future of the club?

Honestly thats too big to read

Vishal16 wrote:

Honestly thats too big to read

Well you might as well fuck of and stop supporting the club if you find a few articles, showing the current climate at the club and the stability in the future, to be too 'big' to read.

Ive read the debt issue before too and plus my constant sneezing has given me a headache and I cant read that much

Vishal16 wrote:

Ive read the debt issue before too and plus my constant sneezing has given me a headache and I cant read that much

Debt issue?

Well this is a development in that issue and I think it's a thing every supporter should follow with keen eyes as it's something that might seriously fuck up the club.


But that's just me. It's futile to tell anything to lazy Indians I think. (in general)

As expected. :|

I want the Japanese/Chinese guys to take over the Glazers!

Kunal Sanghavi wrote:

I want the Japanese/Chinese guys to take over the Glazers!

I want any one to take over from the Glazer's who can wipe out the debt from the club and don't interfere with on field matters.


But it's a dream world we live in to see our club debt free. No one has 1.5-5billion pounds lying in waste to invest in a football club.


Wiping off the PIK's should be a step forward I guess but the bonds will add further debt on the club and cause furthering refinancing.

So, are you sure you've got £60m to spend at Manchester United, Sir Alex?

By
Ian Ladyman

When stories of Manchester United’s supposed interest in the unemployed former England defender Sol Campbell surfaced a month ago, manager Sir Alex Ferguson decided it was time to make a point.

After instructing in-house journalists to ask him about the issue, the Scot did not mince his words in reply.

‘It’s been suggested we were moving for Sol Campbell, that we don’t have any money and that we wanted to take somebody cheap,’ he said. ‘That’s all wrong.

‘The money is there, if I want to buy someone. There is no question about that. That’s a fact.’



Going cheap: Sir Alex Ferguson ruled out moves for freebies like Sol Campbell

Ferguson had, by all accounts, grown tired of suggestions that United were being crippled by the debt bestowed upon them by their American owners, the Glazers. It was, he thought, time to add a voice of genuine authority to the debate.

The problem is, though, that many United followers no longer believe him.

With just £20million of the £80m reaped by the sale of Cristiano Ronaldo in the summer so far reinvested in a team that has shown inconsistent form at times this season and Ferguson showing no signs of spending any more, there are increasing fears that the Glazer regime is — for the first time — severely impacting on the manager’s budget.

Recent revelations that the Glazers are trying once again to reorganise their enormous £700m debt, this time by attempting to chop part of it up into saleable bonds, have certainly set alarm bells ringing.

So, for some time, has the series of small cuts behind the scenes at Old Trafford that smack of a big football club desperately trying to make tiny savings wherever it can.

Redundancies have recently been made in the accounts department, for example. Some staff are no longer entitled to free lunches at the Carrington training ground and at Old Trafford on match day.

Meanwhile, some contributors to the match-day programme and official club magazine have complained of slow payment.


Brothers Grim: (left-right) Joel Glazer, Avram Glazer and Bryan Glazer

United admit that cuts have been made at the club but argue that they are merely behaving in line with the way any large company would in an attempt to offset the effects of a worldwide recession.

The club also claim that the transfer budget for Ferguson is separate to that used to cover day-to-day running costs and point to the fact that a £30m cash offer was made to French club Lyon for the striker Karim Benzema in August as evidence that Ferguson does have cash at his disposal.

That, however, was August. This is now. And it is beyond doubt that the Glazers’ financial grip of affairs at the club they bought in 2005 is becoming ever more precarious.

Having taken on debts of £598m to take the club into private hands four-and-half years ago, the Glazers have subsequently seen that figure rise to £699m and beyond.

This is largely because of the phenomenal interest due each year on the £275m they borrowed from three hedge funds at the time of the takeover.

In the financial year ending June 2008 — United’s last published accounts — as much as £60m was paid in interest alone. That’s £165,000 a day.

With one bout of refinancing having taken place on the whole debt in 2006, the Glazers are now thought to be embarking on another, aimed specifically at rearranging the section still owed to the three hedge funds.




Sugar daddy: Chelsea's Roman Abramovich and Man City's Sheikh Mansur


Neither the family’s spokesman nor banks JP Morgan and Deutsche Bank have denied suggestions that the two institutions have been instructed to arrange a bond issue, something that would alleviate the immediate pressure of continuing to service their debt at high interest levels but would in all likelihood only add to the overall debt in the long term.

At United, the mood remains relatively sanguine.

With Chelsea and Manchester City learning in recent times — City just this week — that their billionaire owners have wiped out the debt owed to them, United remain sceptical about their rivals’ long-term financial outlook.

How, they reason, do those clubs continue to pay their enormous wage bill if Chelsea’s Roman Abramovich or Sheik Mansour at Manchester City choose to sell up and walk away?

Nevertheless, thousands of United followers remain deeply resentful and suspicious of their own owners. To them, they are not the Glazer brothers but the Brothers Grimm, those tellers of tall tales from the 1800s.

During the Glazer years, supporters have seen trophies continue to arrive but they have also seen ticket prices rise and net spending on players remain relatively low.

The family have always denied that they would resort to such drastic measures as selling the naming rights to Old Trafford to raise money or indeed selling the stadium altogether and leasing it back.

To the rank and file, though, those fears remain in the forefront of their minds.

A large cheque written out at Ferguson’s behest, signed by chief executive David Gill and offered to a club such as Bayern Munich for a player such as Franck Ribery would go a long way to settling a few nerves, of course.

For now, that doesn’t look like happening. It is perhaps no wonder that suspicions of parsimony remain.




Source

Just Llook at the season ticket prices over the last five years mad

931 FUCK!

Vishal16 wrote:

931 FUCK!

Didn't I tell you about the ticket prices and how loyal fans have been priced out?

yup you did and this is really sad

And we can do nothing

We can hope

Quote :

Financial state to improve a lot by season end !

Manchester United have reported pre-tax profits of £48.2million for the year to June 30th 2009 and have also announced plans to raise £500million.

The sale of Cristiano Ronaldo to Real Madrid for £80million in the summer was included in the profits as was the £41.9million paid out in interest on the huge loan of £509.5million used to help fund the Glazers' takeover of the club in 2005.

The club also announced that turnover was up from £80.4million in 2008 to £91.3million a year later.

In order to deal with the crippling debt at Old Trafford the champions have announced plans for a bond scheme to be introduced in a bid to raise £500million to replace some of the existing debt.

This would enable institutions or private investors to invest in the club and would offer the club more generous interests rates compared to the 14 per cent they are currently paying.

Without the world record sale of Ronaldo, the Red Devils would have been reporting a loss of £31.8million pounds, a situation that clearly is unsustainable over the long term, hence the bonds issue.

"Manchester United today announced that it will be seeking to raise approximately £500million aggregate principal amount from an offering of senior secured notes due 2017," a United statement said.

"The notes, whose proceeds will be used to refinance existing debt secured against the club, will be issued by MU Finance plc."

United have also announced that American finance giant Aon will take over as the team's primary shirt sponsor next year bringing in increased guaranteed income.

However that has not stopped supporters from being extremely concerned with the club's somewhat perilous financial situation amid mounting interest rates.

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http://www.skysports.com/story/0,19528,11661_5852894,00.html

looks good,hope this happens.
raising 500 million
if they can do that then most of our debt can be paid off!

hope it goes well

i think 931 is ok for 18 matches!!

da london clubs hav more dan dis!!!!
!!

Quote :

MANCHESTER UNITED fans are planning a huge demonstration against the Glazer family.

The American owners have left the Red Devils with a staggering £711million debt. And supporters groups will meet today to plot their protest.

Sean Bones, vice chairman of the Manchester United Supporters Trust, said: "I have never known so many outraged fans as we have had this week."

And bookie Fred Done, an ardent United fan, said: "I hope we do not go the way of Portsmouth."

now m hearing rumrs like selling oT..wr10??!!

is drr any stuff in dem???!!!!

All bullshite

The bond issue has gone through. Short term relief for the club. Still nothing stable in the long term.

Glazer family buys time as Manchester United bond issue raises £500m

The Glazer family were breathing a huge sigh of relief last night after a bond issue raised the £500 million investment they sought to get Manchester United’s spiralling debts under control.

A formal announcement is due to be made when the New York Stock Exchange opens this morning.

More than 50 low-risk investors, primarily insurers and pension-fund providers, have stumped up the cash at a fixed annual interest rate of 9 per cent, The Times understands. The interest must be paid quarterly.

The news comes after a United delegation embarked on a week-long series of “road shows” across three continents, sporting a “warts and all” 322-page prospectus in a desperate bid to woo investors. According to the latest accounts for the year ended June 2009, United owed £509 million to international banks.

The money raised through bonds will be used to pay back that debt, secured against the club. But while the annual interest bill will remain largely unaffected, United — crucially — will be freed of the strict financial conditions imposed by lenders that would have made life hugely difficult for the Barclays Premier League champions if they were less successful on the pitch.

United will face an annual interest bill of £45 million on the bonds, similar to the £41.2 million paid in the last financial year, but unlike the debt at present secured against the club, the bonds do not mature until 2017.

That is also when the payment in kind (PIK) notes, debt for which the Glazers are personally responsible and which takes the total borrowing to £716.5 million, are due to be repaid.

The PIK debt rolls up at an annual interest rate of 14.25 per cent and has already risen to £202.1 million, but with the successful bond issue, the Glazers will have the flexibility to address that matter should they so wish.

They will be able to use up to £70 million of the £117 million of cash on United’s balance sheet to start repaying the PIK notes, which were originally held by three New York hedge funds — Perry Capital, Citadel and Och-Ziff — but which are now understood to rest with about 20 so-called vulture funds, financial institutions with an appetite for high-risk loans.

Given that the interest rate could rise to 16.25 per cent if a debt threshold outlined in the PIK notes is exceeded by August 16, however, the Glazers may now move to ensure that does not happen.

Even if the interest-rate increase does not materialise, the PIK debt will still stand at £588 million by 2017.

The Glazers’ motives were unclear last night, but the bond issue buys them valuable breathing space and plenty of room for manoeuvre, as well as the option to loosen the purse strings for Sir Alex Ferguson, the manager, or burden the club with even more debt — a scenario that would further fuel the fears and anger of fans vehemently opposed to the Americans’ ownership of the club.

Supporters’ groups who have campaigned for the removal of the Glazers are appalled at the amount of borrowing, but, tellingly, the bond issue will remove the risk of not meeting targets and give them more choice about how they spend their profits.

United have signed a 3½-year sponsorship deal with Turkish Airlines, which will replace Air Asia as the team’s official carrier.

Glazer family buys time as Manchester United bond issue raises £500m | Manchester United - Times Online

Good thing.
I have one question though.
The aon sponsorship deal is better or the current AIG one is?

Vishal16 wrote:

Good thing.
I have one question though.
The aon sponsorship deal is better or the current AIG one is?

AON

Thought so,AIG is almost bankrupt isnt it?

They got bailed out by the US government

They gave them a loan which got dissolved right?

I didn't follow it. I'm in science ffs