Manchester United is seeking to raise around £500 million from a special bond issue to pay the debt that is crippling it’s finances, the club confirmed last night. The Glazer family, which bought United in a leveraged £790 million deal in 2005, saddled the club with debt on which the Reds paid more than £70 million in interest alone year.
“Manchester United today announced that it will be seeking to raise approximately £500m aggregate principal amount from an offering of senior secured notes due 2017,” the club said in a statement last night.
“The notes, whose proceeds will be used to refinance existing debt secured against the club, will be issued by MU Finance Plc.”
The club owes the banks more than £500 million on ‘senior’ cash loans and various hedge funds around £200 million in so-called ‘Payment in Kind’ loans, accruing 14.25 per cent interest per year.
The bonds, offered to investors for maturation in 2017, will be used to pay down the PIK loans and part of the senior cash debt.
Sir Alex Ferguson, who has said money is available while refusing to spend it, welcomed the bond issue.
“I don’t have any concerns about the financial situation. There is absolutely no issue at all with the club’s finances,” said Ferguson, who has been one of the Glazer family’s staunchest supporters since the takeover.
“There is debt there, but it has never interrupted my plans for the team at any stage.
“I have no issue at all. There has been talk about a bond issue and I think that’s a good thing for the club. Anything that helps with the repayment of the debt is a good thing.”
Further analysis on bond – United’s bond issue: primer