‘Glazers to pay off high interest PIK loans’

THE FLORIDA-based Glazer family which owns Manchester United are set to pay off a payment-in-kind loan worth around £220m, according to reports.

The news agency Bloomberg said that Red Football Joint Venture Ltd, the holding company which owns Manchester United, will repay 100% of the loan on November 22.

The payment-in-kind (PIK) loans were the most expensive element of the loans which the Glazers used to buy Manchester United in a £790m deal in 2005. Interest rates on the loans rose to 16.25% earlier this year.

Initially, the PIK loan was worth around £138m but has accrued interest ever since. A larger bank loan attracting lower rates of interest was refinanced via a £526m bond issue in January.

Under the terms of the issue, the Glazer family were entitled to a one-off dividend payment of £70m, which fans had feared would be used to pay off the PIKs.

It is not yet clear where the money has come from to repay the loans, but the Bloomberg report suggests that the family have used assets other than the club’s own cash resources to repay the debt, which is owed to three US hedge funds, Citadel, Och Ziff and Perry Capital.

Red Football Ltd, the football club’s immediate parent, is due to report its first quarter results for the three months to September 30.

Duncan Drasdo, chief executive of the Manchester United Supporters’ Trust, said that it was now time for the club’s owners to “come clean and tell the truth about what is going on at Manchester United and what their plans are”.

“What have they got to hide? No more secrecy. No more spin. Just tell the fans the truth,” he said.