That's what I don't understand.
It's also why I wouldn't touch those bonds with a barge-pole.
ALL issues relating to the bond issue and club finances
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That's what I don't understand.
It's also why I wouldn't touch those bonds with a barge-pole.
Aye its a right pain sometimes.
I'll wait till details of the issue come out...then I can decide for myself if we've got some hope.
So without his sale we would be talking about another loss.
Wasn't Ronaldo sold in July though? So why would the fee be included if the accounts are only to the end of June 2009?
It might be a stupid question, but I did get a D in business.
It might be a stupid question, but I did get a D in business.
so this is official now? Interesting
Figure seems to be confirmed at £500m but no word as yet on how much interest they are offering. Clearly it wouldnt make any sense to do this unless it reduced our annual interest bill. I assume the bonds will replace the PIKs and some of the senior debt.
Figure seems to be confirmed at £500m but no word as yet on how much interest they are offering. Clearly it wouldnt make any sense to do this unless it reduced our annual interest bill. I assume the bonds will replace the PIKs and some of the senior debt.
It will almost certainly reduce our annual interest bill.
It will also, presumably, commit them to paying out over half a billion in cash in another 5 years time. How on God's green earth are they gonna manage that?
Sell the club or take more bonds out.
How much could they raise by selling Tampa Bay?
Take a bow Ralphie, the Glaziers have bled us dry
needless to say its still reduces the interest repayments compared to the current lot.
Who knows? They will have to look at the market in 5/6 years time and assess which is their best option at that time.
Anyway, assuming they can pull this off (we have no idea thus far who they are offering the bond to), it will reduce the short term pressure on the club so it is a positive move.
He moved officially there on the 1st of July, the contract was signed before though iirc. Therefore, the fee might have been paid in June by Real Madrid
They have made us a laughing stock and treat fans like we are stupid, time to go
But will leave us fecked for the future !?
Not sure why you say that?
The bond issue will be a good thing for the club if they can pull it off.
they'll refinance the same as they are doing now I reckon. They'll be hoping for a rather large change in the financial markets over the next 8 years. IIRC, the debts as they were had to be repayed by 2017 anyway, according to the repayment schedule, so little has changed apart from a hopefully reduction in interest repayments and one more refinancing option crossed off the list.
I think it all depends what covenants are attached to it.
We may find the criteria not much different to the PIKs.
Even if they are, as long as the overall interest bill is lowered then it would be a good thing - wouldnt you agree?
That's not possible. Interest collected from the money we'd put away in that savings account would be minuscule compared to the one required to make the bond interest payment.
Taking out a bond is not a conservative financial decision for two reasons:
1. It is possible that the we won't be saving any money on the interest payments at all. The article somebody posted here a few days ago said that the interest on bonds we can get now is higher than the loans which are very low, but lower than PIK's. In that case, our interest payment will be higher than before, but, since we're not paying the principal debt, the overall yearly payment would be lower.
2. If number 1 is the case, or if the interest is about the same (it can't be much lower than the low interest on debt), then overall, we'll be paying off much more in debt+interests payments, then we would have if we kept the current repayment structure.
This begs the question, why would they do this? My only opinion is that they are buying time. They can only hope to sell the club or refinance yet again in a few years, which will see us with the same debt yet again. I don't think he can pay it off for decades.
It's not my fault!
not knowing too much but trying to pay attention to it all, it seems like they are just simply buying time, no?
although if they sell the buccaneers they can make some money back it surely wont be enough....what about the land near old trafford they bought a while back, on the train line? are they going to make that into something profitable like housing?
this if from the Guardian..
The figures were released on a morning when United officially confirmed their intention to raise £500m through bonds in order to refinance their debts. While United are at least in profit once more, the figures merely emphasise what a drain on resources their debt position has become.
The situation without the sale of the Portuguese clearly is unsustainable over the long term, hence the refinancing plans of the club's US-based owners, the Glazer family.
"Manchester United today announced that it will be seeking to raise approximately £500m aggregate principal amount from an offering of senior secured notes due 2017," said a United statement.
"The notes, whose proceeds will be used to refinance existing debt secured against the club, will be issued by MU Finance plc."
Because these "senior secured notes" will be used to pay off the club debt, they will not touch the £175m worth of payment-in-kind notes that are currently attracting 14.25% interest.
They are the Glazers' personal debt, so another avenue will presumably be pursued to try to reduce that interest, which is rolling up annually at a staggering rate.
In contrast to the days when United were a successful publicly quoted company and offered plenty of financial information on a six-monthly basis, now there is no financial requirement to do so it is kept to a minimum.
Clearly, though, there are areas of improvement, including confirmation that the US finance company Aon will be the new shirt sponsors next season, while more sponsorship deals have been announced, underlining the impressive attraction United are across the globe.
Yet many supporters remain concerned about the financial structures underpinning the club, even if as recently as Friday, Sir Alex Ferguson tried to quell any fears, insisting the decision not to spend three-quarters of the cash received for Ronaldo was his alone.
"I don't have any concerns about the financial situation," he said. "There is absolutely no issue at all. I am really confident about that.
"Concerns of the supporters are down to the fact that I haven't moved in the transfer market. But that is nothing to do with the Glazers or with David Gill. It is simply because I am not going to pay £50million for a striker who is not worth it."
Manchester United's pre-tax profits reliant on Cristiano Ronaldo sale | Football | guardian.co.uk
The figures were released on a morning when United officially confirmed their intention to raise £500m through bonds in order to refinance their debts. While United are at least in profit once more, the figures merely emphasise what a drain on resources their debt position has become.
The situation without the sale of the Portuguese clearly is unsustainable over the long term, hence the refinancing plans of the club's US-based owners, the Glazer family.
"Manchester United today announced that it will be seeking to raise approximately £500m aggregate principal amount from an offering of senior secured notes due 2017," said a United statement.
"The notes, whose proceeds will be used to refinance existing debt secured against the club, will be issued by MU Finance plc."
Because these "senior secured notes" will be used to pay off the club debt, they will not touch the £175m worth of payment-in-kind notes that are currently attracting 14.25% interest.
They are the Glazers' personal debt, so another avenue will presumably be pursued to try to reduce that interest, which is rolling up annually at a staggering rate.
In contrast to the days when United were a successful publicly quoted company and offered plenty of financial information on a six-monthly basis, now there is no financial requirement to do so it is kept to a minimum.
Clearly, though, there are areas of improvement, including confirmation that the US finance company Aon will be the new shirt sponsors next season, while more sponsorship deals have been announced, underlining the impressive attraction United are across the globe.
Yet many supporters remain concerned about the financial structures underpinning the club, even if as recently as Friday, Sir Alex Ferguson tried to quell any fears, insisting the decision not to spend three-quarters of the cash received for Ronaldo was his alone.
"I don't have any concerns about the financial situation," he said. "There is absolutely no issue at all. I am really confident about that.
"Concerns of the supporters are down to the fact that I haven't moved in the transfer market. But that is nothing to do with the Glazers or with David Gill. It is simply because I am not going to pay £50million for a striker who is not worth it."
Manchester United's pre-tax profits reliant on Cristiano Ronaldo sale | Football | guardian.co.uk
Yeah definatly I'm just wondering how much potential power will be given to the note holders should things go tits up.
Presumably another hedgefund will come in the snap them up.
These guys seem to be more ruthless than the banks.
A friend of mine used to work for a small hedge fund company.
Their Christmas party was in NYC. He caught a stomach bug off his nipper and spend the whole flight over puking his guts up. When they arrived, he was convinced that a night on the tiles would sort him out and ended up in some fancy bar being bought shots by the head of HR. After he'd downed his third shot in quick succession, she took him to one side and told him he was being laid off.
That's pretty fecking ruthless.
For us laymans(me) how do you come up with a figure of 500m + that must be paid back in a few years. Cause if thats the case why would they even bother taking the bonds even with a interest payment of 50m+ per year this still would be cheaper than paying that amount back in a few years.
So really, what it means, is that they are going to try and get in 500m in bonds (which is just a fancy name for a loan) and then pay that back in 2017. So, short term, it reduces the interest on the current loan that we have to pay back to 5% from 14%. However, it just means that in 2017 we'll still have to pay back 500m meaning that we are fecked anyway? In the short term, we still won't be making a profit unless we sell players and we'll even be making more of a loss if the team are not successful on the pitch? So, the only way for the club to survive (and to continue being successful), is either that we start producing amazing talent in the youths meaning we don't need to buy anyone or some mad rich Arab decides to buy the club and lose close to a billion quid that realistically he can never make back?
Would that be correct? I'm no financial wizard either, obviously.
Would that be correct? I'm no financial wizard either, obviously.
Maybe you should read the post I was replying to?
They were always going to have to refinance as the deadline for the payment of the senior debt is approaching and there's no sign that they're going to be able to pay off any of that. If they get the bonds, I assume that it'll reduce immediate interest on the senior debt (but not the PIKs) and put back the date of payment of the actual loan(?). However, I believe their previous refinancing effort increased the debt. And of course this is all assuming that they can get someone to take the bonds.
It's not exactly a prime location for housing. Stuck in the middle of the Trafford Park industrial estate! I assume they have other plans for that.
Article from the FT,
Man Utd confirms plans for £500m bond issue
By Roger Blitz and Anousha Sakoui
Published: January 11 2010 12:22 | Last updated: January 11 2010 12:22
Manchester United on Monday confirmed plans for a bond issue to refinance the football club’s debts, saying it was looking to raise £500m from a senior secured notes offering.
It also revealed it was entering into a new revolving credit facility to allow it to borrow an additional £75m, to be used for working capital and, probably, to help the club to continue buying players.
English Premier League champions, owned by US sports franchise owner Malcolm Glazer and his family, said in a brief statement the notes would be due in 2017, and would be issued by MU Finance.
A call option will allow the borrower to buy it back in three years. The senior secured high-yield bonds are not rated, and the proceeds will refinance the club’s senior debt and second-lien loans.
The issue is being underwritten by JPMorgan, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and Royal Bank of Scotland. KKR, the US-based private equity fund, is one of the managers of the deal.
Roadshows have begun in Asia, before moving to Europe and the US. The bond, which will be denominated in dollars as well as sterling, is expected to price at the end of next week.
People with knowledge of the deal said the bond would mean Manchester United was not under the same covenant restrictions as the loans, and would also be able to use up to 50 per cent of its cashflow to pay a dividend to the Glazer family, enabling them to repay a punitive payment-in-kind loan, which carries interest of 14.25 per cent.
Manchester United’s secured bank debts total £510m, while the Pik loans – which fall on the Glazers – stand at £202m.
The bond could price with a yield of about 8.5 per cent, one of the people said.
The bond is understood to be secured on most of the club’s assets, including its Old Trafford stadium as well as the Manchester United name, a person with knowledge of the deal said. The club’s Carrington training ground is not part of the security.
The club also issued the yearly accounts for Red Football, the immediate holding company, showing the impact of the £81m sale of Cristiano Ronaldo to Real Madrid last summer.
The sale created a near-quadruple rise in player transfer profit and turned Red Football’s pre-tax loss of £21.4m in 2008 into a pre-tax profit of £48.2m.
Turnover grew from £256.2m to £278.5m, with matchday, media and commercial revenues all increasing. Operating profit before depreciation and amortisation of intangible fixed assets rose from £80.4m to £91.3m.
Red Football reduced the size of its secured bank loan from £518.7m to £509.5m, and net interest payments from £45.5m to £41.9m.
The Glazer family bought Manchester United in a £790m leveraged buy-out in 2005, and most recently refinanced its debts in July 2006.
Link to article
Man Utd confirms plans for £500m bond issue
By Roger Blitz and Anousha Sakoui
Published: January 11 2010 12:22 | Last updated: January 11 2010 12:22
Manchester United on Monday confirmed plans for a bond issue to refinance the football club’s debts, saying it was looking to raise £500m from a senior secured notes offering.
It also revealed it was entering into a new revolving credit facility to allow it to borrow an additional £75m, to be used for working capital and, probably, to help the club to continue buying players.
English Premier League champions, owned by US sports franchise owner Malcolm Glazer and his family, said in a brief statement the notes would be due in 2017, and would be issued by MU Finance.
A call option will allow the borrower to buy it back in three years. The senior secured high-yield bonds are not rated, and the proceeds will refinance the club’s senior debt and second-lien loans.
The issue is being underwritten by JPMorgan, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and Royal Bank of Scotland. KKR, the US-based private equity fund, is one of the managers of the deal.
Roadshows have begun in Asia, before moving to Europe and the US. The bond, which will be denominated in dollars as well as sterling, is expected to price at the end of next week.
People with knowledge of the deal said the bond would mean Manchester United was not under the same covenant restrictions as the loans, and would also be able to use up to 50 per cent of its cashflow to pay a dividend to the Glazer family, enabling them to repay a punitive payment-in-kind loan, which carries interest of 14.25 per cent.
Manchester United’s secured bank debts total £510m, while the Pik loans – which fall on the Glazers – stand at £202m.
The bond could price with a yield of about 8.5 per cent, one of the people said.
The bond is understood to be secured on most of the club’s assets, including its Old Trafford stadium as well as the Manchester United name, a person with knowledge of the deal said. The club’s Carrington training ground is not part of the security.
The club also issued the yearly accounts for Red Football, the immediate holding company, showing the impact of the £81m sale of Cristiano Ronaldo to Real Madrid last summer.
The sale created a near-quadruple rise in player transfer profit and turned Red Football’s pre-tax loss of £21.4m in 2008 into a pre-tax profit of £48.2m.
Turnover grew from £256.2m to £278.5m, with matchday, media and commercial revenues all increasing. Operating profit before depreciation and amortisation of intangible fixed assets rose from £80.4m to £91.3m.
Red Football reduced the size of its secured bank loan from £518.7m to £509.5m, and net interest payments from £45.5m to £41.9m.
The Glazer family bought Manchester United in a £790m leveraged buy-out in 2005, and most recently refinanced its debts in July 2006.
Link to article
Without wanting to add fuel to the fire or WUMming, from what I've read so far it kind of implies that Man Utd need to be successful on the pitch to continue attracting deals off it. More than getting the right players (youth,etc), Ferguson is more vital to you in the next 5-10 years than he has been in your previous 5-10.
Kind of puts my own's clubs dire position into perspective. I want Rafa out, but haven't really thought it through properly - so maybe I don't want him out right now.
Kind of puts my own's clubs dire position into perspective. I want Rafa out, but haven't really thought it through properly - so maybe I don't want him out right now.
So they are going to try and use the bonds - secured against the club - to pay off the PIKs?
Financial Times said:
Which would suggest that the answer to the question, "do we have money to spend on players?" is "no".
It does suggest that's the plan, in an indirect fashion. It seems that there are currently covenants preventing them from withdrawing from the club to do that at the moment.
I suspect there is a current pot but that £75m will be used for future years transfers.
Lots of things that don't seem to add up:
- how can the assets be used as security since they're already in hock to the banks
- one article suggested the PIKs were NOT going to be paid off
- the PIKS are secured on Red Football
- is anyone going to buy this bond?
- how can the assets be used as security since they're already in hock to the banks
- one article suggested the PIKs were NOT going to be paid off
- the PIKS are secured on Red Football
- is anyone going to buy this bond?
Im still not really clear on whether this bond issue will be used directly or indirectly to pay off the PIKs - seems to be a bit of conflicting info (as usual)
Not necessarily - dont forget that all the info at the moment just comes from a club press release (we will get the indepedant analysis in the coming weeks as the accounts are made public) so I assume they put that in there specifically to try and address fears about future spending.
The bond issue can't be used to pay off the piks And will address the senior debt but the deal negotiated with the bond underwriters seems to allow them to use a proportion of the profits go pay off the piks.
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