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Malcolm Glazer plans to sidestep Manchester United's biggest shareholders by approaching the board direct with a renewed £800 million offer for the world's richest football club.
In a significant change of tactics, the US mogul will only make an offer to Irish racing tycoons John Magnier and JP McManus if United's directors recommend his bid.
Glazer's previous approach failed when the Irish pair, who speak for 28.9 per cent of United's shares through their Cubic Expression investment vehicle, refused to play ball.
Magnier and McManus remain key to United's future. Winning their support would hand control of the Old Trafford club to Glazer on a plate as the American already has 28.1 per cent.
Glazer has not tried to revive contacts with the Irish multimillionaires and neither he nor his new financial advisers - respected investment bank NM Rothschild - plan to do so.
Instead Glazer and his sons, Joel and Avi, plan to address concerns about the original bid, which was rejected as being 'overly leveraged' and 'not in the interests of the company'.
The revised offer, which could be made within a fortnight, will contain less debt and more equity. Glazer now plans to borrow about £400m secured against the assets of United, including long-term sponsorship deals with Nike and Vodafone, to expand the stadium and invest in players.
But, in a bid to woo fans bitterly opposed to any takeover, Glazer has ruled out a sale and leaseback of the Old Trafford stadium and promised only 'modest' increases in most ticket prices. 'Only the prawn sandwich brigade in the corporate boxes would be whacked,' said a source.
Glazer is also keen to keep the current executive team on board. Rothschild's is organising a syndicate of about half-a-dozen banks who were keen to back Glazer first time round and are thought to be still interested.
Details of his new bid have yet to be finalised. Options include offering shareholder fans the chance to retain a small stake in the club. They may even have a seat on the board.
But Glazer may still stick to his original plan and take the club private by buying out all shareholders at 300p a share.
From the Guardian:
Malcolm Glazer is understood to be trying to reduce the amount of debt in his planned bid for Manchester United to one-third of the value of the offer. The plan is designed to persuade, or force, United's directors to give him access to the club's sponsorship contracts and other detailed financial information.
United's board blocked access last year, arguing that Glazer's first £800m proposal was so overburdened by debt that it would expose the club to unacceptable risks.
Under the first proposal, debt represented about 70% of the value of the offer. It is understood that Glazer, advised by the investment bank NM Rothschild, now envisages a roughly even split between debt, equity (which mainly comprises Glazer's existing 28.1% stake) and a form of "preferred" or enhanced equity.
Glazer and Rothschild are thought to be still at least a fortnight away from being able to present a firm proposal to the United board.
The debt element, though, has already been arranged in principle. JP Morgan is understood to be willing to lend the required sum of £250m-£275m, even though the bank resigned as Glazer's adviser last November after the American ignored its advice not to vote three United directors off the board. As before, the loan would be subject to a satisfactory inspection of United's books.
The preferred equity element will be the most controversial. Its precise nature is unclear, but it appears investors in these shares would be entitled to additional rights above conventional shareholders.
If those rights are similar to lenders' rights, however, United's directors could argue the preferred shares could more properly be regarded as debt and that the proposal has hardly changed in terms of leverage. Equally, Rothschild and Glazer will be aware of that trap and know the new proposal has to be sufficiently different from the first.
Yesterday Glazer's camp tried to dampen the current speculation by saying that no comments in the press attributed to "any member of the family or person associated with the family" had been authorised. The statement was partly encouraged by the Takeover Panel, the City's policer of deals.
Rothschild's office in Manchester has received the expected hostile reaction from some United fans. There have been attempts to jam the office's email and telephone systems and pictures of Rothschild's Manchester directors were posted on several websites.