Mikäs tämä 500 miljoonan lainajuttu olikaan..? Kuulostaa uskomattomalta riskiltä, mutta kun en asiasta enempää ole perillä niin antaa olla..
You may have read in last week's news plans by Arsenal to introduce a
ticket sales bond from which they hope to raise £260 million to help pay
for the construction of their new 60,000 seater Emirates Stadium at
Ashburton Grove. (details here -
http://www.joinmust.org/forum/showthread.php?t=26981)
Now rumours abound that Glazer is about to introduce his own brand of
securitisation at Old Trafford. Just what does this mean for United fans?
MUST's chair, Nick Towle, explains.
Securitisation is another form of debt, where a company (United) issues a
corporate bond which is bought in tranches by investors (e.g. investment
funds, pension funds etc), which is repayable as to principal within 3 to 5
years and which carries a fixed (or floating) interest rate competitive
with the market (say 6% currently). This is cheaper than the current
interest rates on the debt at United.
The bond is not secured on the company's assets, like a secured loan, but
United will agree with the sponsoring bank (rumoured to be RBS, as with the
Arsenal deal) that all income from ticket sales and possibly other fixed
income streams (e.g. AIG sponsorship, Nike merchandising) will be paid into
the account of the sponsoring bank to cover both interest and principal
repayments on the bond over its life. OT itself would be ring-fenced in the
sense that United could not sell, mortgage or otherwise deal with it while
the bond is in issue (to protect its revenue streams).
As OT is bigger than the Emirates stadium, and United has more fixed income
than the Gunners, the size/proceeds of the bond issue at United could be as
much as £500 million.
How does this all fit in with the current debt situation at United?
The Glazers took out two types of debt to buy United:
(i) the secured loans from JP Morgan lent directly to United and secured on
its assets (like OT), and
(ii) the hedge fund debt which is owed by Glazer's holding company (Red
Football) to the hedge funds and which is not secured on United's assets,
although the funds do have rights over Glazer's United shares and also
United's business and playing operations if Glazer fails to repay these
debts on time.
Since JPM has security/mortgages over OT and other assets of United, the
securitisation cannot proceed without JPM's consent and in fact, probably
not without paying back all of the JPM debt (currently standing at around
£254m). So the first priority of the proceeds received by United from
investors who buy the bond would go to repay all of the JPM debt.
If the bond issue amount is bigger than £254m, then the Glazers could use
the excess to pay down part of the hedge fund debt by getting United to pay
a special dividend up to Red Football, it's parent company. That's why they
would like to issue as big a bond as possible, as they have no other
realistic prospect of paying down the hedge fund debt which is set to rise
by about £70m this year (to near £400m by May next year).
The Glazers would be gambling on other non-securitised income rising fast
enough to cover the shortfall in available cashflow. The new TV deal will
be crucial in this respect, as will the prospect of more Champions League
football - bringing in increases in TV revenue from UEFA.
This whole deal would be another huge gamble by the Glazers, betting
United's future to secure their own fortune that is tied up in our club and
with the banks.
Why is it a huge gamble by the Glazers and why is it bad for the club?
1. They would be increasing the debt load on United, by effectively
transferring all or part of the hedge fund debt onto the club (in addition
to the amount of the JPM debts).
2. They would be replacing one type of debt with another, which can just as
easily lead to default and similar consequences as happened at Leeds if it
all goes wrong.
3. The banks would have even more control over the finances and assets of
the club.
4. The club would be required to set aside for the banks a huge amount of
United's income (perhaps as much as half of its current revenues of £165m),
thereby reducing its financial flexibility and available cashflow to pay
outgoings (salaries) and to fund player transfers. The transfer pot could
be very small for Fergie or the new manager over the next few years and
getting world-class players in could be even more difficult than it is now.
5. It also significantly reduces the market value of United as the banks
will be taking control of the most of the income streams of the company
(e.g. ticket revenue increases go to the bank, not to the club) and it also
reduces the attractiveness for another investor in United if Glazer wants
to sell down some shares. United will slip even further and faster down the
list of 'rich clubs'.
This deal may or may not help the Glazers out of a debt hole, but if most
of the club's income is going to the banks and bondholders, how can it be
good for the club and its attempts to keep up with the big clubs in England
and Europe?
