IF ONLY THE GLAZERS WERE NOT FOR REAL

Last updated : 18 July 2006 By Ed

Financial Times:

Manchester United has finalised a new £660m ($1.2bn, €958m) debt package that cuts its interest bill and strengthens the Glazer family's grip on the English football club.

Manchester United has halved to £135m the amount it owes in the form of payment-in-kind (PIK) notes, the risky instruments with very high rates of interest, people familiar with the matter said.

According to people familiar with the refinancing, Manchester United's annual interest charge will fall to £62m, compared to £90m under the old deal, even though its borrowings will increase from £580m to £660m.

The drop is due to its decision to redeem £275m in PIK notes held by three hedge funds: Perry Capital, Och-Ziff Capital Management and Citadel. The notes were accruing £63m a year in interest and could have forced the Glazer family to hand over some of its stake in Manchester United if they were not fully repaid.

Following the refinancing, Manchester United still owes £135m in the form of PIK notes, some of which will continue to be held by the same hedge fund investors.