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Author Topic: United's refinancing  (Read 902 times)

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January 13, 2010, 09:20:35 PM
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Ong-Timus Prime



PIKING APART THE MAN UTD REFINANCING

You have to look hard to find it, but it's there in the notes on page 30 of the (printed) prospectus -- what appears to be a key reason for Manchester United's 500m senior notes offering and refinancing.

(1) Cash and liquid resources include cash at bank and in hand and deposits held at call with banks. Of our cash and liquid resources of 116.6 million as at 30 September 2009, as adjusted to give effect to the offering of the Notes and the application of proceeds therefrom, we may, without restriction, make a distribution or loan of up to 70.0 million to our immediate parent company, Red Football Joint Venture Limited, that may, in turn, use the proceeds of that loan for general corporate purposes, including repaying existing indebtedness. See ''Description of the Notes-Certain Covenants-Restricted Payments''.

In other words, it frees up some cash: the Glazer family will be able to take 70m out of the club's resources of 116.6m  and use it to repay some of the 200m PIK notes they personally used to finance the 780m buyout of the Premier League champions.
The PIKs, which have an eye-watering coupon of 14.25 per cent that rolls up annually, reside in the Red Football Joint Venture. This sits near the very top of the Manchester United financial structure.

If, as seems likely, the Glazers do that, the effect will be to make Manchester United even more leveraged than it is now.

Cash will be taken out of the club and up-streamed to the Red Football JV, leaving pro forma adjusted net indebtedness much higher than the 466.1m stated in the prospectus. Pro forma annual interest expense will also be higher than the 46.3m quoted and as for the quoted net debt/EBITDA ratio of 4.6...

All of which could mean a smaller transfer budget for Manchester United boss Sir Alex Ferguson.

And that's not good news, unless you are a Manchester City fan of course.
if you know yer history...

January 13, 2010, 11:29:12 PM
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fast lane


More debt for manure, I like the sound of that.
The club I've hated most, from a boy onwards.
Thank You (Falettinme Be Mice Elf Agin)

January 14, 2010, 02:49:18 AM
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GLewis

NSNO Subscriber
They could buy EFC with their interest payments.

Staggering.


January 15, 2010, 08:19:58 PM
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Ong-Timus Prime


They could buy EFC with their interest payments.

Staggering.

Yes - staggering that our fans still put up with our Boy Blue Chairman...
if you know yer history...