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Glazers hit with loan interest hike

Increase will add millions to Man Utd owner’s loan repayment

Published on August 20th 2010.

Glazers hit with loan interest hike

The Glazer family will have to pay millions extra on a loan it took out to refinance Manchester United, after failing to keep its debts under control.

The club’s American owners saw interest on the payment-in-kind (Pik) loan increase by two per cent to 16.25 per cent. The loan, taken out by the Glazer controlled Red Football Joint Venture Ltd, is due to be repaid by 2017.

The new rate of interest will see the cost of the loan total more than £267m at the end of next June and more than £310m by 2012. The repayment of the loan is the responsibility of the Glazers and not the club, although United is now saddled with more than £700m of debt due to the 2005 takeover.

In a statement, Manchester United Supporters’ Club (Must) said: “The rise in the Pik interest rate this week, caused by the Glazers’ inability to hit their own targets, is another sad chapter in the story of their exploitation of Manchester United.

“The increasing cost of the Piks will inevitably be borne by Manchester United. The Glazer family have failed to repay a single penny of their debts in the last four years and the only source of cash is our football club.”

PIK loans are typically used in leveraged buyouts because they carry coupons that accumulate and are paid on maturity or when the debt is redeemed.

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6 comments so far, continue the conversation, write a comment.

AnonymousAugust 20th 2010.

A sports club, however you swing it, is a pretty high risk investment meaning that *ANY* buyer (with the exception of sovereign wealth and ultra high net worth syndicates) would have a degree of leverage which, naturally, would be secured on the asset (club) albeit with or without a guarantee. If there is no personal guarantee on the debt held by the asset (club) you can bet your bottom dollar that there will be toggles or similar features to guarantee some sustainability in the debt at the lender end (nobody would lend totally risk free) and there may be contracts in place through the purchasing vehicle or otherwise with lenders to secure the cashflow. There is no obligation for the glazer's to pay the debts off within a particular period, indeed, it may be more tax efficient for them to not do so- from a supporter's club point of view, you have to realise, the club is cash positive, there is a strong syndicate who are supporting the club with cash it needs, the net worth of the glazers is not inconsiderable- and WORST CASE SCENARIO- Manchester United is one of the strongest sporting brands in the world, and believe me- there will be a queue of sovereign and other wealth funds who would be happy to take the reigns should the glazer's default or be unable to repay obligations.

Now, with that in mind... maybe people should focus on more important matters- such as rebuilding the level of community spirit and social engagement with football- rather than speculating and ranting over corporate finance.

GJHAugust 20th 2010.

Yes but then the attention seekers at the supporters groups would not get on nw tonight for two minutes, and thats point of their existence.

Leigh ScottAugust 20th 2010.

nicked that for the blues to read on the MEN :@)

AnonymousAugust 20th 2010.

From the supporters club website...

"1. That supporters, not absentee investors, are our club's lifeblood. It is our support, our passion, and indeed our funds that propel the club."

(their sincere apologies to Nike, Hublot, AIG, Audi, and so forth... because their funds dont... oh, and lets not forget the corporate supporters, international tv channels, product licensees... oh, and also lets not forget the bond-holders, investors.......)

"2. That because we are its lifeblood, the club's priorities should reflect our priorities. We want a rampant United with world-class players winning trophies, where the money the club earns is continually reinvested and not creamed off by an investor to his own benefit."

Ahhh, y'see now we're living in planet crazyland, where you can build a word class brand, and a world class business... with no business priorities...

If the supporters club really really really wants to support united, they should try... i dont know... SUPPORTING UNITED

D KesslerAugust 21st 2010.

we all know how this will end...

How Much!August 23rd 2010.

Wasnt it sir matt busby who said lets make great football for the great local supporters??? now its just impossible, Im not united fan but my little lad is growing up a fine united fan, now he wants to go and see a game, I didnt realise you have to pay to be a member as well as pay ridiculous amounts for the tickets once joined, and then I hear that you have to apply??? is this really great football for the local people, this is just money making money grabbing for the glazers in my eyes..

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