The Glazer family is looking to issue a £600 million bond to ease the club’s debt burden, according to reports. There is more than £550 million in debt on the club’s books, while the family is responsible for a further £175 million ‘Payment in Kind’ hedge fund loan that accrues more than 14 per cent interest annually.
“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,” reports The Times.
“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.”
The bond, effectively an ‘IOU’ against which City investors loan money in exchange for a predetermined interest rate, would ease the club’s overwhelming interest burden that stands at £70 million annually.
Bond investors could raise £500 – 600 million in a successful issue, according to City analysts, with United liable to pay down the original principal plus interest by the ‘maturity’ date. In the current financial climate the Glazer family has been unable to refinance the club’s debts through normal commercial banking.