peterstorey
Specialist In Failure
I would imagine the main object of the exercise is to wipe out the PIKs. If you take the money sloshing around in the current account plus the £70M earmarked from the bond that would about kill them off.
Not yet it doesn't.Nope. The club belongs to the Glazer's creditors.
Problem is, no matter what someone might think - there's not a whole lot he can do anyway.I'd doubt it
Much of the stuff that's come out today has been discussed heavily in the past, and they managed to keep their heads thoroughly inserted into the ground then
It's certainly good news for the Glazers if they pull it off. But bad news for United in the short to medium term.On the other hand, the Glazer's are not fools. I don't want to seem pro-Glazer here, but restructuring debt does make sense if it means we pack back less.
Do you seriously believe that?We've got to accept that our time is coming to an end.
The final straw will be when the c*nts cash in on Rooney in the summer.
They wont be safe.We've got to accept that our time is coming to an end.
The final straw will be when the c*nts cash in on Rooney in the summer.
True. & the PIKs are the biggest problem.I would imagine the main object of the exercise is to wipe out the PIKs. If you take the money sloshing around in the current account plus the £70M earmarked from the bond that would about kill them off.
Just one question. Can't bonds be paid back way before they are due?My Summary of events based on this thread: (for anyone who still doesnt have a clue what is going on).
We have debt. A lot of debt. This was brought on us - as we all know - by the Glazers, who stupidly decided to take out PIK (Payment In Kind) loans to finance their takeover. PIK's are essentially just loans, but with far higher rates of interest specifically, our ones are at 8% and 14.25%, which is the main cause of our problems as we cannot afford to keep up with the interest payments. Because of that, the interest is getting "rolled up" into the debt, and it builds up like a rolling snowball or downward spiral, whichever you prefer.
When the PIKs are due to be repaid, if the Glazers cannot stump up the cash, the value of the loans will be given to the investors in shares for whatever the Glazers cannot/have not paid.
Now, bonds are essentially just another type of investment or loan, a lot depends on the exact terms and structure of the bonds, but from what we have heard, chances are that we are going to issue bonds for £600m - giving us the money to pay off the PIKs. The bonds would be repayable in about 2017 (again, depends on the terms and conditions) with a rate of interest of about 5% - far lower than the PIKs - which is normally paid on an annual basis. So in 2017 we will need to pay off £600m, but until then we will have far lower interest payments, which all in all is probably a good thing.
The real question remains however, how they plan to pay off the money on a bond in 2017 other than by selling the club. Because whilst the PIKs will simply be converted to equity (shares) if they cannot be paid - the bonds will likely have no such clause in them, and will need to be paid back in cold hard cash, something that is in short supply at the moment for us.
I think that roughly sums it up (based on my fairly poor financial knowledge).
They can be traded between date of issue and date of maturity. On maturity, bond issuers (in this case, the Glazers) would pay the bond holders the principal (and possibly interest accrued, I dont wholly remember).Just one question. Can't bonds be paid back way before they are due?
If I'm getting this correctly, does that mean we must wait till the bond matures to pay back?They can be traded between date of issue and date of maturity. On maturity, bond issuers (in this case, the Glazers) would pay the bond holders the principal (and possibly interest accrued, I dont wholly remember).
There only seems to be provision to use £70m to pay off the PIKs at the moment - not sure about the rest.I would imagine the main object of the exercise is to wipe out the PIKs. If you take the money sloshing around in the current account plus the £70M earmarked from the bond that would about kill them off.
The club have the option to buy back the bonds after 3 years.Just one question. Can't bonds be paid back way before they are due?
Hah...you and me both Cheify. Did this in Financial Markets last year and I still dont get it.If I'm getting this correctly, does that mean we must wait till the bond matures to pay back?
Forgive me. if I sound silly. Me and financial figures are not good friends...
Interesting....There only seems to be provision to use £70m to pay off the PIKs at the moment - not sure about the rest.
This all starts to make sense when we remember that the first tranche of the PIKs were repayable in August 2010.
The club have the option to buy back the bonds after 3 years.
There is a decent summary of some of the facts (without headline grabbing bullshit) here:
FT Alphaville Modern football finance: Man Utd edition (updated)
I feel that. I still wonder how I passed finance and accountingHah...you and me both Cheify. Did this in Financial Markets last year and I still dont get it.
That's a scary thoughtBut yeah, I think thats the case ......
Hah...you and me both Cheify. Did this in Financial Markets last year and I still dont get it.
But yeah, I think thats the case (correct me if im wrong here people)
Then at least your consciences are clear, as it's people like you who graduated, smoked some cigars, patted themselves on the back, and then helped get us into this mess.I feel that. I still wonder how I passed finance and accounting
That's a scary thought
My understanding of the bond market may not be whole at the mo'Then at least your consciences are clear, as it's people like you who graduated, smoked some cigars, patted themselves on the back, and then helped get us into this mess.
Wait and see.Not yet it doesn't.
Yes it is a good question - MUST will tell you it is because no one else would lend them the money so they were forced to take the very high interest option.Good question indeed from FT alphaville comments - why glazers took out a personal loan from hedge funds in the first place? And at such a crippling interest rate? One would think they could've secured more favorable loan at the time of the takeover.
From your sums there's about £146M in cash which added to the £70M makes about the outstanding PIKS plus a bit of early redemption penalty. The revolving credit is then available to run the company and you have replaced the senior debt with a slightly more expensive bond (worth it to get the PIK monkey off your back).There only seems to be provision to use £70m to pay off the PIKs at the moment - not sure about the rest.
The £70m has to come out of the £146m so you cant add them together.From your sums there's about £146M in cash which added to the £70M makes about the outstanding PIKS plus a bit of early redemption penalty. The revolving credit is then available to run the company and you have replaced the senior debt with a slightly more expensive bond (worth it to get the PIK monkey off your back).
You had £146M in the bank on 30 September -nothing to do with the bond.The £70m has to come out of the £146m so you cant add them together.
I meant the Credit Crunch Igors who happily (and mindlessly) shuffled about in the dungeons stirring the derivative stew whilst dreaming of one day living in the castle above.My understanding of the bond market may not be whole at the mo'
But fecking hell, at least I wouldn't have gone and bought the club with money that wasn't mine in the first place.
Common sense. I sense it is lacking in the Glazers.
That was my understanding too. I think it says it in the prospectus.The £70m has to come out of the £146m so you cant add them together.
Ahh...sorry lad.I meant the Credit Crunch Igors who happily (and mindlessly) shuffled about in the dungeons stirring the derivative stew whilst dreaming of one day living in the castle above.
Well I guess one could see it as kind of a challenge. After all, you guys now have an interesting task presented to you by your bungling predecessors.Ahh...sorry lad.
Thought that was a pop at me.
An appropriate metaphor.We'll be indebted to you.
Thank you for not calling a horrible pun by its Christian name.An appropriate metaphor.
Mate I've been thinking the same.Well I guess one could see it as kind of a challenge. After all, you guys now have an interesting task presented to you by your bungling predecessors.
Study hard and think broadly across disciplines to come up with creative (non-criminal, market-faith restoring) ways of moving capital without too much clotting. We'll be indebted to you.
I reckon they will be long gone by then mate.2017 sound like a very important year in our history.
The world ends in 2012 anyway so no worries.2017 sound like a very important year in our history.