United thread 2012/13 (inc merged IPO thread)

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Prestwich_Blue said:
Bluemoon115 said:
Prestwich_Blue said:
We could but it won't make any day-to-day difference to them. It might however hurt the Glazers personally as it's widely believed they secured a big loan on club shares. If the shares aren't worth enough then the lenders can call the loan in or demand more security. That would be quite funny.
Pretend the rest of us don't understand the inner workings and explain it in simple terms, for fun.

;)
Before the IPO, the rags were a private company with all the shares owned by the Glazers. They reckoned it was worth £2bn but no one agreed with them. But there's no easy way to value a private company accurately.

They've now formed a new company based in the Cayman Islands and issued shares to the public via the New York Stock Exchange. There are 16.67m shares so the 'value' of the company is 16.67m times whatever the share price is (currently $13.50).

It is rumoured the Glazers personally had to take out a huge loan (£250m) to pay off some very expensive debt they'd taken on to buy the club and which could have really wiped them out. They will have had to provide security for that loan so used the shares of Manchester United. If that was the case, the lender would monitor the Loan-to-Value (LTV) ratio to make sure it stayed at an acceptable level. This is quite common in big loans and if the value of the security drops, they usually request extra security or reduction of the debt.

There is speculation that the Glazers needed to reduce their personal debt so did that by selling their own shares aas part of the IPO. So of the 16.67m shares sold, half were new shares in the new company and half were the Glazers own shares. This got them about £75m, which they presumably used to reduce their personal debts.

However, now the shares are publicly traded, the value is easy to determine so if the price falls dramatically then the valuation of their security is less. As an example, if you borrow £700k and provide shares worth £1m as security £1m, your LTV ratio is 70%. Lets say it's 100,000 shares priced at £10 each.

If the share price falls to £5, your security is only worth £500k and therefore your LTV ratio is over 100% (you're in negative equity effectively). To get than down to 70% again, you either have repay £650k of that £1m loan so that the outstanding amount is only £350k (against security of £500k) or provide more shares to make the security worth £1m again. If you can't do either than the bank will generally sell the shares before they go down further to reduce the debt and protect themselves from losing even more.

Well why didnt you say so in the first place, dont worry too much about the myrrh next time.. :)
 
Changing the subject, did anyone here that deluded rag on Talk Shite earlier. Apparently, we're gutted at not getting RVP and we're only pretending to think that it's not good business to buy a 30 year old, injury prone striker.
 
Pam said:
Changing the subject, did anyone here that deluded rag on Talk Shite earlier. Apparently, we're gutted at not getting RVP and we're only pretending to think it's another bad rag buy.

Hes just deluding himself tbh, It makes him feel better thinking that we are arsed, this also masks his own disapointment that this could well be another bad rag buy.
 
Uniteds new attack, Dutch view

<a class="postlink" href="http://www.101greatgoals.com/blog/picture-an-amazing-headline-from-dutch-newspaper-telegraaf-on-van-persies-move-to-united/#.UCzSXn2Y2S8.facebook" onclick="window.open(this.href);return false;">http://www.101greatgoals.com/blog/pictu ... 8.facebook</a>
 
But MUFC original book value was £800 Million I think so IF MUFC was used as collateral for latest loans they would have likely used that value as a reference point and it would have to fall a long way before this became an issue
 
SWP's back said:
samharris said:
Prestwich_Blue said:
Thanks. Seems like the underwriters have withdrawn their support. Could get interesting now.

Really...could we see a crash ??
Down nearly 4% the first day the underwriters have stopped buying them all up. I can't see it rebounding any time soon.

Why would it [they]? The shares wont be paying a dividend anytime soon, so you end up investing capital into something that is depreciating - absolute zero return, even worse your capital that you would have invested is worth less.

I can't believe anyone would have been so stupid, maybe thats why they floeated in the US?

Will be interesting to see how they fare should they have a bumpy start to the season, most sensible investors (that have been stupid enough to buy them) will bail out and cut their losses.
 
Marvin said:
But MUFC original book value was £800 Million I think so IF MUFC was used as collateral for latest loans they would have likely used that value as a reference point and it would have to fall a long way before this became an issue
What do you refer to here?
 
SWP's back said:
Marvin said:
But MUFC original book value was £800 Million I think so IF MUFC was used as collateral for latest loans they would have likely used that value as a reference point and it would have to fall a long way before this became an issue
What do you refer to here?
The Utd sp and PB's suggestion that Utd may have used MUFC as collateral for loans. See above. The theory was that if the price falls then the Glazers would have to deposit additional collateral. My point is that if that was the case, any original collateral would likely have been valued at book value as there was no market until recently.
 
Marvin said:
SWP's back said:
Marvin said:
But MUFC original book value was £800 Million I think so IF MUFC was used as collateral for latest loans they would have likely used that value as a reference point and it would have to fall a long way before this became an issue
What do you refer to here?
The Utd sp and PB's suggestion that Utd may have used MUFC as collateral for loans. See above. The theory was that if the price falls then the Glazers would have to deposit additional collateral. My point is that if that was the case, any original collateral would likely have been valued at book value as there was no market until recently.
Do you not realise that market value supercedes book value?
 
SWP's back said:
Marvin said:
SWP's back said:
What do you refer to here?
The Utd sp and PB's suggestion that Utd may have used MUFC as collateral for loans. See above. The theory was that if the price falls then the Glazers would have to deposit additional collateral. My point is that if that was the case, any original collateral would likely have been valued at book value as there was no market until recently.
Do you not realise that market value supercedes book value?
But when the loans were made - if they were made - there was no means of valuing Man Utd so I am suggesting that if the Company was used as collateral they would have used the value based on the Glazer takeover which was £800M therefore this only becomes a problem once the market cap drops below £800m
 
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