Manchester United has announced that more than $A300 million of its high-interest debt has been refinanced, cutting the club’s interest costs by about $A15 million a year.
Fresh from winning a 20th English title and undergoing an apparently smooth managerial succession, United said on Thursday it has secured a new loan from Bank of America with far lower interest rates.
United has refinanced STG 177.78 million pounds of outstanding 8.75 per cent interest sterling bonds and STG 22.09 million of 8.375 per cent dollar bonds.
The new loan from June 24 will have an estimated starting interest rate of about 2.78 per cent. Interest payments should come down from about STG 31 million to STG21 million per year, United said in a statement.
United, which is owned by the American Glazer family and listed on the New York Stock Exchange, has approximately halved its total debts to STG 370 million in three years.
The refinancing package appears to indicate investor confidence in both the business and the first managerial change at Old Trafford since 1986, with David Moyes replacing Alex Ferguson.
“It shows that the infrastructure is in place and the decision they made on the managerial front is viewed as, not negative, but positive,” Majid Ishaq, managing director of financial advisory group Rothschild, told The Associated Press.
“They are in a position today where they have gone back to the market to refinance that particular part of the financing on very attractive terms because they have really delivered, and grown the underlying revenue and profitability.”
United said earlier this month it is on course to generate more than STG 350 million this season after earning a record STG 91.7 million in the three months to March 31. Net profit more than trebled year-on-year to STG3.6 million in the third quarter.
“United is unique in that they have a great historic brand, and they have managed to derive value from that history and heritage in a very commercial way,” said Ishaq, a football finance expert. “That’s a big positive for investors.”
