United’s owners seek New York IPO
THE Glazer family which owns Manchester United Football Club is planning to float shares on the New York Stock Exchange.
Documents filed with the US’s Securities and Exchange Commission show that the club, whose registration has moved to the Cayman Islands, is planning to raise an initial $100m which will be used to pay down debt. It does not indicate how many shares will be offered and the valuation being placed on the club by the family.
It does state, however, that the ‘A’ shares being offered will be of a different class to the ‘B’ shares being retained by the family, and that ‘B’ shares carry 10x the voting rights as the shares being offered.
The 283-page document shows that the IPO is being handled by a club of five investment banks including Jefferies, Credit Suisse, JP Morgan, Bank of America Merrill Lynch and Deutsche Bank Securities.
It states that the club has 659 million followers – based on a recent survey by Kantar Media – and that an average game in its 2010/11 season was viewed by an average audience of 49 million per game.
It also states that Premier League games at Old Trafford “have been sold out since 1997/98”.
The company said the proceeds will be used to pay down debt and does not intend for shareholders to be paid dividends. At March 31, the club had debts of £423.3m despite large amounts of cash being paid in recent years to service these debts.
A list of risks associated with the flotation warn that the club’s debts “increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness”.
“We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs,” it says.
The club also states that its debt “may restrict our ability to pursue our business strategies”.
There is also a warning that the club’s principal shareholder “will be able to exert control over us and our significant corporate decisions”, particularly with the way in which voting rights are structured.
Manchester United Supporters’ Trust (MUST) – an independent fans’ organisation which has opposed the Glazers’ ownership of the club since the Florida-based family took over in an £800m deal in 2005 – said that until further details relating to the float were made public then it was uncertain what it will mean for fans or the club.
Its chief executive, Duncan Drasdo, said the fact that the voting rights of ‘A’ shares was so limited and that they would not initially pay dividends could “severely impact on the attraction to both financial and supporter investors”.
“However, if it turns out that the vast majority of the proceeds are used to pay off the debt that is certainly something MUST would welcome and entirely vindicates our longstanding position that their debt was damaging our club.
“The destination of the funds shows the Glazers have finally conceded this.”
