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Friday 15 December 2017

Glazers consider refinancing debts to halt Knights' march

The Glazer family are considering a second round of refinancing in an effort to remove Manchester United's huge debt burden.

The American owners also hope that the move would help to stave off a planned takeover by the Red Knights.

Initial talks have taken place within the Glazers' inner circle about how to get rid of their payment in kind (PIK) loans that could total £588m by the time they are due to be repaid in 2017.

No final decision has been taken and a deal could be many months away, but a second refinancing would represent an about-turn for the Glazers, who, publicly at least, have shown little concern about the PIK loans until now.

The debt, which stood at £202.1m according to the latest accounts, is rolling up at an astonishing annual interest rate of 14.25pc.

The club's £716.5m total debt has been cited by the Red Knights, a group of City financiers-cum-United fans, as the key driver behind their plans for a takeover.

It also emerged yesterday that the multimillionaire boss of one of the UK's biggest hedge funds is one of dozens of rich United fans considering joining the Red Knights. Jon Aisbitt, the Man Group chairman, has held talks with Nomura, the Knights' investment bank, about signing up.

Despite the debt, United's commercial revenues are soaring, with the club today expected to announce a sponsorship agreement with a mobile telecommunications company in southern Africa, their third such deal in a week.

The Glazers have yet to appoint a bank to oversee the planned refinancing, although it is likely that they will turn to JP Morgan, their trusted financial adviser, which drove through the recent £504m bond issue.

There are several ways in which the Glazers could refinance the PIK debt. A source close to the Americans said they had already had several approaches from investors who would buy a stake in the club.

A well-placed banker said: "The Glazers have been approached by lots of groups about a deal."

Rather than sell a stake, however, the Glazers would prefer to refinance the PIK at a more favourable rate of interest.

"Crazier things have been done than this," the banker said.

Because the interest rate could rise to 16.25pc if a debt threshold outlined in the PIK notes is exceeded by August 16, there is good reason for the Glazers to secure a refinancing package as quickly as possible.

Under the terms of United's bond, the Americans will be able to use up to £70m of the £117m of cash on the club's balance sheet to start repaying the PIK notes.

© The Times, London

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