Manchester United look set to refinance some of the huge debt
the club is in by selling it off in bonds.
500 million pounds worth of bonds are allegedly being pushed by
the Glazer family to raise enough capital to pay off existing high
interest debts.
The way bonds work are like a loan, but in reverse.
For example, an investor might give one million pounds to MU
Finance PLC and in return the company guarantees to give the
investor back his/her one million pounds when the bond matures,
plus interest.
This gives the Glazers two benefits.
1) It gives them more control over the debt by
allowing them to set the interest rates on the bonds.
2) It buys them a few more years before the
wolves come calling at the door.
The bonds wouldn’t however, cover the PIK debts which are the
real worry for the Glazers.
The American family are looking increasingly desperate in their
attempts to juggle the club’s finances and this has led to
speculation amongst fans that the end is near.
Sir Alex Ferguson’s insistence that he has money to spend is not
an opinion shared by many fans, and his continual ramblings about a lack of
“value” in the market seem to back up the popular theory
that the debt situation is finally biting us in the arse.
