Glazers buy back loans

The Glazers appear to have been able to wipe out a substantial portion of Manchester United debt by buying back PIK loans which carry a high interest rate.   The significance of this development is that it undermines recent arguments that the Glazers would be obliged to sell the club because of the cost of servicing its debt.   It may help to explain the relatively relaxed response to the recent increase in interest on the PIK loans from 14.25 to

The Glazers appear to have been able to wipe out a substantial portion of Manchester United debt by buying back PIK loans which carry a high interest rate.   The significance of this development is that it undermines recent arguments that the Glazers would be obliged to sell the club because of the cost of servicing its debt.   It may help to explain the relatively relaxed response to the recent increase in interest on the PIK loans from 14.25 to 16.25 per cent.


The loans were available cheaply during the global financial crisis in 2008 when they fell sharply in value.   It is believed that the Glazers bought 20 per cent of the loan issued by Red Football Joint Venture which controls the club.  The size of the PIK loans has been reduced from an estimated £228m to £182m.    The debt at maturity would be £523m compared with £654m, a saving of £131m.


What this effectively means is that the Glazer family are paying themselves interest on the money they borrowed to buy Manchester United.   Fans are left worried about where the cash to pay off the PIK loans is coming from.