Last updated : 10 June 2007 By Editor

The Telegraph:

The American family that owns Manchester United is negotiating a refinancing package which may trigger the exit of the US hedge funds that backed British football's biggest takeover deal.

Malcolm Glazer and his six children, who took the Premiership champions private in acrimonious circumstances just over two years ago, are studying a series of refinancing options presented by advisers at Deutsche Bank, Royal Bank of Scotland and JP Morgan, the US investment bank which engineered the £790m takeover.

The advisers are expected to meet the Glazers in the next few weeks to discuss their preferred route towards refinancing the club's £660m debt. Sources close to the talks say they expect a deal to be secured before the start of the football season in August.

The principal refinancing options are understood to be a securitisation of future matchday revenues at Old Trafford - about £3m for each of the 29 matches played at the 76,000-capacity stadium last season.

Deutsche and RBS are leading this proposal, while JP Morgan is suggesting ways of undertaking a more straightforward debt refinancing. This would include redeeming the remaining £135m payment-in-kind (PIK) loan note taken on as part of the original deal.

A trio of US hedge funds - Citadel, Och-Ziff and Perry Capital - were among the original investors in the debt syndicate for the takeover, as was General Electric, which was reported to have taken on £20m of the borrowings.

A first round of refinancing was undertaken last summer which reduced the club's annual interest bill from £90m to just over £62m. Och-Ziff is understood to have sold out of the PIK note during last summer's refinancing.

A redemption of the remaining £125m PIK note would cut the interest bill further while increasing United's overall borrowings to about £700m.

This week, suggestions circulated the City that the Glazers planned to borrow money against Old Trafford itself, but were rebuffed by the consortium of banks. These rumours were dismissed last night by an adviser to the Glazers.

"They are still looking at all the options. The banks all have an informal mandate to explore what to do next," said the adviser. "Expect this to move very quickly once they have decided what to do."

Although the Glazers' takeover did not herald the widespread abandonment of the club which many of United fans had predicted, the family has continued to prove unpopular over its ticketing policies.

From August, season ticket holders will have to commit to buying tickets for each home cup game as well as league matches. The proposed refinancing of the club's debt comes amid takeovers involving England's top-flight football clubs. Liverpool, Portsmouth and Aston Villa have all changed hands within the past two years, while Newcastle United is about to fall into the hands of retail tycoon Mike Ashley, the man behind Sports Direct.