U*****s financial mess

[Blue Dan]

Can see a rooney and vidic sale to ease the debt. these are the only sellable assets they have

I wonder if we could tempt them with a bid for Evra? He's a good mate of Carlito's by all accounts and would probably consider crossing the Manchester/Salford border if the price was right.

 

[bluevengence]

 

[Freestyler]

But a goodrun in the FA cup with a lot oh home games and 74,000 sell out crowds, advertising revenue and prawn sandwich sales & no forgetting the TV revenue will help to ease the debt.......Oh wait, Leeds have just knocked them out

Brilliant post. still laughing.

me to, quality lol

 

[J-Bay Blue]

A bond issue cannot "solve" their debt crisis.
If the proposed bond issue is successfull and the coupon rate (interest rate payable) is not higher than the rate being paid on the debt to be substituted, at best they will extend the term (the time in which they have to repay the debt) and they may possibly be able to substitute secured debt for unsecured.
The details of the proposed bond issue will be interesting (convertible to equity or not etc).

At this rate, a hedge fund could end up owning the scum!

Nic Leeson to replace baconface, anyone?

 

[droylsdenblue]

But a goodrun in the FA cup with a lot oh home games and 74,000 sell out crowds, advertising revenue and prawn sandwich sales & no forgetting the TV revenue will help to ease the debt.......Oh wait, Leeds have just knocked them out

Brilliant post. still laughing.

quality!

 

[Blue Mist]

I know I am being thick but if that lot did do a bond issue, do the new bond holders get a say in how the club is run ? I know it is not like having shareholders etc but presumably these money men will want to know the club is run financially well so could they then restrict the amount of money spent on new players ? Can anyone explain (in simple terms)

 

[Footyblue]

I know I am being thick but if that lot did do a bond issue, do the new bond holders get a say in how the club is run ? I know it is not like having shareholders etc but presumably these money men will want to know the club is run financially well so could they then restrict the amount of money spent on new players ? Can anyone explain (in simple terms)

Bond issuances rarely have any significant covenants about what the issuer can and cannot do. And the idea of a convertible bond in this setting is low. Man Utd. isn't publicly traded. So why would anyone want to convert into an illiquid security? Most likely they are just looking to lower the interest rate on their debt.

 

[Blue Mist]

I know I am being thick but if that lot did do a bond issue, do the new bond holders get a say in how the club is run ? I know it is not like having shareholders etc but presumably these money men will want to know the club is run financially well so could they then restrict the amount of money spent on new players ? Can anyone explain (in simple terms)

Bond issuances rarely have any significant covenants about what the issuer can and cannot do. And the idea of a convertible bond in this setting is low. Man Utd. isn't publicly traded. So why would anyone want to convert into an illiquid security? Most likely they are just looking to lower the interest rate on their debt.

Cheers for that. Now I can just carry on laughing at them.

 

[blueprint]

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6973929.ece

MANCHESTER UNITED is considering a £600m bond issue as part of the Premier League club’s battle to bring its spiralling debts under control.

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.

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.

In the past few weeks, advisers have begun sounding out potential investors on a bond issue. The cash would be used to pay back some of the club’s existing debts.


Manchester United, champions for the last three years, owe about £700m to banks, financial institutions and hedge funds, according to debt specialists, Capital Structure. Most of this stems from the Glazer family’s takeover, which was criticised by fans because so much debt was being loaded on to the club.

The club insists the debt is not a problem because the annual interest on the various loans is covered by its operating profit. In 2008, net interest on all its debts was £69m against an operating profit £72m. The main concern for the club’s owners is the £175m of loans that the Americans are personally responsible for and which “roll up” interest at an annual rate of 14.25%.

The so-called payment in kind (Pik) notes borrowed from Perry Capital and Citadel, two American hedge funds, initially stood at £138m in 2006, but have since accrued £40m of unpaid interest.

If the club’s financial performance deteriorates below a certain level then the hedge funds have the right to appoint their own directors to the board.

Sources familiar with the situation say the amount that Manchester United will seek to raise depends on the appetite shown by investors. At present the figure is between £500m and £600m. If demand is strong, the club could seek more.

It is unclear whether the proceeds of a bond issue would be used to repay the controversial Pik debt or the £520m that is secured against the club. The Glazers would prefer to pay back the more costly Pik debt, but experts said any attempt to prioritise the hedge funds that lent the money would be met with stiff opposition from the club’s senior bank lenders.

Instead, bankers said that the club might look to pay off the bank debt, which is likely to have higher interest rates than the cost of the annual coupon on the bond.

The club put in place a more long-term financing structure in 2006 and has since attempted to refinance on a number of occasions but, as many British companies have found, the credit crunch and resulting economic climate have scuppered their efforts.

Fans’ groups have cast doubt on whether the world record £80m transfer fee the club received for Cristiano Ronaldo last summer will be reinvested. However, the club has said publicly that Sir Alex Ferguson, the manager, has plenty of money available to spend.

Brilliantly insightful! Hehe.
Reminds me of Lehman Bros sunk by Akerlof's theory 'The Market for Lemons'.

 

[blueprint]

For those of you who wants to know

A theory developed by George Akerlof, the American economist. Nearly 40 years ago he published a paper called The Market for Lemons. A lemon is something that people think is going to be trouble and, as a result, are extremely wary about buying. Akerlof took the example of used cars. Why would anybody sell an apparently faultless car? Perhaps because they knew that the gearbox was about to seize and the engine fall out. Such fears might be unfounded, but who would want to take that risk?