ALL issues relating to the bond issue and club finances

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DFreshKing said:
No one said they could take more dividends. I made that point clear in reply to Richio on the previous page.

It was whether they could take more money, which of course they can if they have different income stream from the club I.E Interest on PIKS.
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:rolleyes:

PIK interest will never be an income stream from the club to the Glazers. The PIK notes, interest and all, can only be repaid by either cash gained by their entitled dividends or from some other personal wealth. They cannot bill the club for PIK interest in any circumstances, they can only take from the club upto their entitled dividend.

Accept this for it is reality.

If you cannot understand these simple truths then i don't know why you're posting in this thread. You may sneer when Gill says that the PIK's are not the responsibility of the club, but in this case that statement is entirely accurate and relevant.
 
ciderman9000000 said:
:rolleyes:

PIK interest will never be an income stream from the club to the Glazers. The PIK notes, interest and all, can only be repaid by either cash gained by their entitled dividends or from some other personal wealth. They cannot bill the club for PIK interest in any circumstances, they can only take from the club their entitled dividend.

Accept this for it is reality.
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The cash being channelled up to RFJV isn't a 'dividend'.
 
peterstorey said:
The cash being channelled up to RFJV isn't a 'dividend'.
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From the bond issue prospectus:

''The declaration and payment of dividends or other distributions, or the making of loans, by the Parent or any of its Restricted Subsidiaries to Red Football Joint Venture Limited in an aggregate amount not to exceed £70.0 million since the Issue Date.''
 
peterstorey said:
The cash being channelled up to RFJV isn't a 'dividend'.
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It's an entitlement from the bond agreement though, which amounts to the same thing, and it could be taken irrespective of the PIK situation; what URR is saying is that the owners could take their annual dividend each year and then bill the club a further £Xm for interest on their portion of the PIK notes. Plain and simple, he's just wrong.
 
anders, you didn't answer; will you re-evaluate your stance in light of the 20% news? Surely you must now see that boycotts are not a realistically applicable means of forcing the Glazers to sell, that natural support rather than organised prohibition is the clear and favourable path of action?

Will you retract your recommendation of boycotts?

I'm not asking you to support the Glazers, simply to retract your recommendation of boycotting United, that's all
 
GCHQ said:
From the bond issue prospectus:

''The declaration and payment of dividends or other distributions, or the making of loans, by the Parent or any of its Restricted Subsidiaries to Red Football Joint Venture Limited in an aggregate amount not to exceed £70.0 million since the Issue Date.''
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So they can channel £70M up to RFJV and pay down a portion of their own PIK holding putting £14M cash in their greasy pockets.
 
GCHQ said:
From the bond issue prospectus:

''The declaration and payment of dividends or other distributions, or the making of loans, by the Parent or any of its Restricted Subsidiaries to Red Football Joint Venture Limited in an aggregate amount not to exceed £70.0 million since the Issue Date.''
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So who has actually bought this 20%? This quote would only be relevant if RFJV have bought them, if it is an unrelated glazer business then they could take the interest.
 
peterstorey said:
So they can channel £70M up to RFJV and pay down a portion of their own PIK holding putting £14M cash in their greasy pockets.
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Yes, although purchasing 20% of the PIK presumably cost them more than £14m so they wouldn't be in profit on that transaction quite yet?
 
peterstorey said:
So they can channel £70M up to RFJV and pay down a portion of their own PIK holding putting £14M cash in their greasy pockets.
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Yes, which is why they profited very shrewdly when the bought the 20%. This would have the same effect as if they wrote-off their 20% completely; they could still take £14m from the £70m if they wished, with or without the 20%. What they cannot do is take any additional payments from United than were previously agreed to; they cannot use their portion of the PIK's to further extract money from the club.
 
DFreshKing said:
So who has actually bought this 20%? This quote would only be relevant if RFJV have bought them, if it is an unrelated glazer business then they could take the interest.
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But what do you mean? The PIKs are secured against the shares in RFJV, and have to be paid from RFJV's books.

The maximum amount the club can channel to RFJV is defined in the bond prospectus and the ownership of RFJV PIK debt has no effect on it. The amount of money that can leave the club does not depend on who owns the PIKs, as Andersred stated earlier.
 
MikeUpNorth said:
But what do you mean? The PIKs are secured against the shares in RFJV, and have to be paid from RFJV's books.

The maximum amount the club can channel to RFJV is defined in the bond prospectus and the ownership of RFJV PIK debt has no effect on it. The amount of money that can leave the club does not depend on who owns the PIKs, as Andersred stated earlier.
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Which is probably why Gill told us "The PIK's are not United's responsibility."
 
ciderman9000000 said:
Yes, which is why they profited very shrewdly when the bought the 20%. This would have the same effect as if they wrote-off their 20% completely; they could still take £14m from the £70m if they wished, with or without the 20%. What they cannot do is take any additional payments from United than were previously agreed to; they cannot use their portion of the PIK's to further extract money from the club.
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That's taking more in cash than they were limited to by the dividend constraints (which was URR's original point).
 
DFreshKing said:
So who has actually bought this 20%? This quote would only be relevant if RFJV have bought them, if it is an unrelated glazer business then they could take the interest.
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The quote is relevant because it shows that the cash payment to RFJV can be made in the form of a dividend payment. That's not important though, it's just another example of Storey getting the detail wrong.

I don't really understand where you're going with this claim about the Glazers ''taking the interest''. Taking the interest from what? Their share of the PIK debt? They could in theory use the annual dividend/exceptional dividends from Red Football Limited to pay down/redeem part of their (accruing) 20% share but that doesn't amount to more cash leaving the club overall.
 
peterstorey said:
That's taking more in cash than they were limited to by the dividend constraints (which was URR's original point).
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Yes, the Glazers will get more cash because they bought the 20% of the PIK at a reduced rate, but it doesn't affect the total amount leaving the club does it?

In the end I don't really care if the money from RFJV goes to the Glazers or some other greedy hedge fund bastards... it's already left the club. :mad:
 
ciderman9000000 said:
We've done that bit, URR.



You were wrong, your examples are nonsense, so kindly put a sock in it, will ya?

Even if the Glazers held 100% of the PIK's then they still could not take any more than their annual dividend entitlement out of the club; the entitlement is capped and is calculated entirely irrespective of all PIK debt no matter who holds it; any payment the Glazers wished to make to themselves for the PIK notes could only ever come from either their personal wealth or the dividends which they would be wholly entitled to regardless of whether they held 100% or 0% of the PIK notes, and what's more, any payment made to themselves would be entirely negated by the fact that the whole concept is fecking nonsense! They could hold 100% of the PIK's and let the interest roll up until they total £100trillion, it would not make the slightest bit of difference to either United or the Glazers. So put a fecking sock in it!
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Total fantasy- you are such an easy feck!!
 
Rood said:
As we know, the PIK is still technically nothing to do with the club so I guess that is why they dont need to report anything about it in a document like the Bond prospectus.

In any case, it wouldnt be too difficult to get round that type of reporting rules anyway - there is more than one way to skin a cat.

I do remember discussing this exact possibility with you in the past !
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The standard was created for this kind of situation.

The PIK is still within the group and therefore would require discloure.

I would love to know what technicality they have got off on.
 
robertsoncrusoe said:
Total fantasy- you are such an easy feck!!
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:mad:

Damn it! How do you keep coming up with these bulletproof arguments?! "Total fantasy-" why didn't i think of that?!

And yet here we have anders...

andersred said:
Edit: Cider is of course correct, the dividend entitlement is capped irrespective of its destination.
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And then GCHQ...

GCHQ said:
Glad to see you keeping the dunces in check, Cider.
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Perhaps the two most renouned financiers on the caf to tell you that it'sa not total fantasy, that it was in fact you who were the fantasist.

But nevermind, eh?
 
ciderman9000000 said:
Simply because if they choose to write off their portion of the PIK debt then the remainder of the debt can be cleared by 2013. Without that 20% held by the Glazers you're looking at at least 2017 best-case-scenario before the PIK's could possibly be cleared. Once the PIK's are cleared the club is pretty much home and dry as far as any real risk to our finances is concerned; the news that the Glazers control 20% of that debt is a massive boost to anyone worried about the club's future; it's the nature of high-interest finance; 20% might not sound like a huge amount, but do the sums and you'll see that it really puts us in a position one whole order of magnitude better off than we would be without it.
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I can't really see how that adds up, you can pay 80% off in 3 years, but 100% in 7 years?
 
Commadus said:
So should we use a German system where only half of interest costs can be written down against profits.

The Anglo Saxon model encourages takeovers which fuels nice fat fees. What are the statistics 4 out of 5 M&A loses shareholder value.
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That's more to do with synergies and the underlying value of the acquisition I would have thought rather than tax relief.
 
andersred said:
2) It isn't a related party transaction under FRS8 as RFJV was not a party to the purchase.
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I wouldn't have thought that would have mattered when you consider it from a group scenario.

They are still part-financing the group via the purchase of the PIK regardless of which company it was purchased from.

This is exactly the kind of scenario the standard was created for.
 
datura said:
I can't really see how that adds up, you can pay 80% off in 3 years, but 100% in 7 years?
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It's all to do with the mechanics of high-interest financing, datura.

Consider the spread sheet below:

Simplified to £200m total PIK debt beginning, a one-off payment of £95m year one and then £30m every year following from dividends.

Scenario A
This shows how the PIK's might have been paid off had the full 100% of the debt still been held by third parties. It takes until the year 2020 before the debt is eradicated.

Scenario B
This shows how the PIK's might be paid off if the Glazers write-off their 20%. It only takes until 2015 to eradicate the debt.

Scenarios C and D
These show the above scenarios but with the expected drop in interest rate back down to 14.5%. As you can see the dates are 2018 and (nearly)2014 to eradicate the debt.

pikq.jpg


So you see that by just holding 20% of the PIK's it's possible for the Glazers to wipe out the debt 50% faster, in this case that means a whole 4/5 years earlier than previously expected and forecast by anders.

The club is a whole lot more secure than anyone ever knew, and has been since early 2008.
 
The debt we have to pay for them would be wiped out alot quicker if they would sell the club to people who actually are successful businessmen and have money
 
Re Ciderman

Ok, but your scenario only makes the club look more secure if they choose to write-off the PIK they control, which hasn't happened as yet it appears. They also haven't paid off any of the PIKs in the previous year when they had the funds available.

Also, it still doesn't assuage any fans fears about the money going out of the club hence why no one is being particularly positive about it.

It seems another stroke of luck for them that the market bottomed out enabling to pick up the debt far cheaper than it's real value. Really, the only beneficiaries are the Glazers themselves.
 
datura said:
Ok, but your scenario only makes the club look more secure if they choose to write-off the PIK they control, which hasn't happened as yet it appears. They also haven't paid off any of the PIKs in the previous year when they had the funds available.

It still doesn't assuage any fans fears about the money going out of the club hence why no one is being particularly positive about it. It seems another stroke of luck for them that the market bottomed out enabling to pick up the debt far cheaper than it's real value. Really, the only beneficiaries are the Glazers themselves.
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Yeah, that global recession was a stroke of luck and a half. Theyve fallen on their feet there.

The Glazers are beneficiaries but at worst it has sweet FA impact on United and best case its a real improvement in circumstances.

What it doesnt do is allow the Glazers to take a penny more out of United than they previously could have. What they do with it may have changed as a result but the effect on the club, the thing which people claim is more important than anything else, is in no way negatively affected.
 
datura said:
Can you fools take your tedious bickering to another thread please unless you actually have something interesting to add other than the usual crap?
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Eh? weve been debating the effect of the PIK purchase. Where pray tell should we discuss it sire? And as someone who was entirely correct Im not sure how it makes me a fool. You hardly add a great deal to these topics.
 
datura said:
It seems another stroke of luck for them that the market bottomed out enabling to pick up the debt far cheaper than it's real value. Really, the only beneficiaries are the Glazers themselves.
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I wouldn't call it a 'stroke of luck' as, in all likelihood, if the market hadn't bottomed out then they would have been able to re-finance the PIKs to much lower interest loans. Buying back some of the high interest PIKs at a reduced rate was probably them making the best of a bad situation.
 
datura said:
Ok, but your scenario only makes the club look more secure if they choose to write-off the PIK they control, which hasn't happened as yet it appears. They also haven't paid off any of the PIKs in the previous year when they had the funds available.

It still doesn't assuage any fans fears about the money going out of the club hence why no one is being particularly positive about it. It seems another stroke of luck for them that the market bottomed out enabling to pick up the debt far cheaper than it's real value. Really, the only beneficiaries are the Glazers themselves.
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It gives them options, though doesn't it? They have to begin paying off the PIK's to some extent this year or else they'll spiral, but controlling that 20% gives them much more flexibility when doing so than was ever conceived before. Personally i'm resigned to the fact the the Glazers are here, they've been here for five years and they look certain to be here for at least seven more, so what's good financially for the Glazers now is good financially for the club imo. As for them being lucky, it's been said before that they seem to get lucky at every throw of the dice; if you ask me that would indicate something much more than simply good luck.
 
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