Post by Scott on Jul 17, 2006 22:30:31 GMT
From Financial Times:
Manchester United has finalised a new £660m ($1.2bn, €958m) debt package that cuts its interest bill and strengthens the Glazer family’s grip on the English football club.
Manchester United has halved to £135m the amount it owes in the form of payment-in-kind (PIK) notes, the risky instruments with very high rates of interest, people familiar with the matter said.
The refinancing, which comes 14 months after the Glazers took control of Manchester United for £790m, reflects increased optimism about the club’s financial prospects after agreeing a new shirt sponsorship deal and the Premiership’s three-year broadcasting deal. It also reflects the continuing improvement in the terms available to borrowers in the debt market.
According to people familiar with the refinancing, Manchester United’s annual interest charge will fall to £62m, compared to £90m under the old deal, even though its borrowings will increase from £580m to £660m.
The drop is due to its decision to redeem £275m in PIK notes held by three hedge funds: Perry Capital, Och-Ziff Capital Management and Citadel. The notes were accruing £63m a year in interest and could have forced the Glazer family to hand over some of its stake in Manchester United if they were not fully repaid.
Following the refinancing, Manchester United still owes £135m in the form of PIK notes, some of which will continue to be held by the same hedge fund investors. However, these carry a lower rate of interest and do not convert into equity.
Since the Glazers took over, Manchester United has agreed a four-year, £56.5m shirt sponsorship deal with AIG, the insurer, and has completed work to expand the capacity of its Old Trafford stadium from 67,000 to 76,000. These are expected to help boost the club’s earnings before interest, tax, depreciation and amortisation by as much as 50 per cent in the current financial year.
The club and the Glazer family declined to comment on the refinancing, arranged by JPMorgan Chase. However, a spokesman for the Glazers said the structure would continue to provide Sir Alex Ferguson, Manchester United’s manager, with “sufficient funds in the transfer market”.
Manchester United has finalised a new £660m ($1.2bn, €958m) debt package that cuts its interest bill and strengthens the Glazer family’s grip on the English football club.
Manchester United has halved to £135m the amount it owes in the form of payment-in-kind (PIK) notes, the risky instruments with very high rates of interest, people familiar with the matter said.
The refinancing, which comes 14 months after the Glazers took control of Manchester United for £790m, reflects increased optimism about the club’s financial prospects after agreeing a new shirt sponsorship deal and the Premiership’s three-year broadcasting deal. It also reflects the continuing improvement in the terms available to borrowers in the debt market.
According to people familiar with the refinancing, Manchester United’s annual interest charge will fall to £62m, compared to £90m under the old deal, even though its borrowings will increase from £580m to £660m.
The drop is due to its decision to redeem £275m in PIK notes held by three hedge funds: Perry Capital, Och-Ziff Capital Management and Citadel. The notes were accruing £63m a year in interest and could have forced the Glazer family to hand over some of its stake in Manchester United if they were not fully repaid.
Following the refinancing, Manchester United still owes £135m in the form of PIK notes, some of which will continue to be held by the same hedge fund investors. However, these carry a lower rate of interest and do not convert into equity.
Since the Glazers took over, Manchester United has agreed a four-year, £56.5m shirt sponsorship deal with AIG, the insurer, and has completed work to expand the capacity of its Old Trafford stadium from 67,000 to 76,000. These are expected to help boost the club’s earnings before interest, tax, depreciation and amortisation by as much as 50 per cent in the current financial year.
The club and the Glazer family declined to comment on the refinancing, arranged by JPMorgan Chase. However, a spokesman for the Glazers said the structure would continue to provide Sir Alex Ferguson, Manchester United’s manager, with “sufficient funds in the transfer market”.
