Explanation of Glazer’s debt financing proposals
Posted in News on Tuesday May 24th, 2005 9:30am
From Shareholders United:
Glazer has taken on up to £921 million of debt, both personal and corporate, to acquire United.
If this debt is allowed to run for at least 7 years, then the accumulated repayment value could reach as high as £1.5 billion.
The debt leveraged on United’s assets could be as much as £700 million within 6 months of closing of the offer.
Servicing that £700 million debt (interest and principal repayments) would average out at approx. £85 million p.a. for the first 7 years, increasing substantially thereafter
Glazer could reduce the debt burden by the sale and leaseback of Old Trafford, which might net him £200 million.
In that case, servicing the debt could still cost the club an estimated £55 million per year, plus the annual OT lease payment.
The offer document contains no detail on how the club might generate enough cash to pay down this debt and no commitments on transfer funds or other key issues for United fans and small shareholders.
Manchester United is in peril as never before. No other football club has ever had a debt burden of this size, and there is no real prospect of clearing this debt for many years to come.
More comprehensive details are on the Shareholders United site.
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