Marc
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Registered: 11th Aug 02
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http://www.skysports.com/story/0,19528,11095_5879235,00.html
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Whittie
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Registered: 11th Aug 06
Location: North Wales Drives: BMW, Corsa & Fiat
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Wish Liverpool could raise £504M tbh.
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Ben G
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Registered: 12th Jan 07
Location: Essex
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still over 200 million in debt though  and personally, you don't have 200M worth of players any more.
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Cosmo
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Registered: 29th Mar 01
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quote:
Originally posted by Ben G
still over 200 million in debt though and personally, you don't have 200M worth of players any more.
They are still the full amount in debt, as bonds are just another form of debt.
I expected the interest rate to be lower than you have form the banks, but according to that its more, which makes you suspect they are up to something that the banks wouldnt allow them to do.
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Marc
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It has shifted the debt as you say and it will ease the interest repayments.
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Cosmo
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Registered: 29th Mar 01
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quote:
Originally posted by Marc
It has shifted the debt as you say and it will ease the interest repayments.
How so? As according to that article interest will rise a couple of mil a year.
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Marc
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You sure?
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Cosmo
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Registered: 29th Mar 01
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quote:
However, the interest payment on the bonds will be £45m compared to the current £41million on the bank loans.
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Marc
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I thought it would be lower.
So what was the point?
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Cosmo
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Im not sure. At a guess, it will give them more freedom to do what they want with the money, previously the bank loans would of carried a huge number of rules of what they can and cant do with it, they would of been secured on assets that they could do nothing with, they would prevent them taking money out of the club, etc. Now they have issued these bonds they will have much less rules and limits on what they can do with the cash.
They are certainly up to something as they've not lowered the interest at all which is what was made out would be the case to begin with.
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Marc
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Well I'm quite intrigued now, we both finally have a common interest in United
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Nath
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Registered: 3rd Apr 02
Location: MK
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United will never go bust so it doesn't matter.
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Cosmo
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quote:
Originally posted by Nath
United will never go bust so it doesn't matter.
Not technically true now. Id of agreed that previously, when the debt was with the banks, it would never go bust because the banks would not allow it and it would be worth while to them to sell as a going concern. However now the debt isnt with the banks, its with huge amounts of faceless investors who would have no say of saving the club should they be un able to repay the bonds.
Now obviously someone would still buy the club and it wouldnt go out of existence, but they couldnt be saved from administration like they could when the debt was with the banks.
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Nath
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Registered: 3rd Apr 02
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It is true though. I have nothing to back that up but they wont. If shit like Pompey keep getting rescued then one of the biggest brands in the World will also get rescued.
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Marc
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Interesting point Cosmoan, never thought of that.
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Cosmo
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quote:
Originally posted by Nath
It is true though. I have nothing to back that up but they wont. If shit like Pompey keep getting rescued then one of the biggest brands in the World will also get rescued.
Pompey havent been rescued yet, and they have only been kept out of trouble because the PL TV money has gone a long way to cover their immediate debts. If it goes tits up at United and they cant pay the bonds back then even the next 20yrs of TV money being paid in advance wouldnt help them.
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Nath
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Registered: 3rd Apr 02
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They wont go bust. Nobody in the Prem will. Hold me to that.
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Terry12
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Registered: 24th Sep 07
Location: Manchester
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According to this article the interest rate has been reduced from 14.25% to 8.375 and 8.75%.
There is a provision that allows them to withdraw £70M from the club in the first you, You robbing Yank bastards
http://www.crainsmanchesterbusiness.co.uk/article/20100123/FREE/100129938/1033
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Cosmo
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The PIK loans you have never paid any interest off, and have therefore never been included in the clubs accounts when it comes to reporting turnover/profit. You have always allowed the interest to be rolled over and over.
So whilst its great you're getting rid of them, it wont make any difference to the bottom line figure, and will only really make a difference to the Yanks who will now not be personally covering any debt should the club go tits up (another interesting point!).
It also means you wont be paying back all the actual bank debt you have, so you'll have the interest from that due yearly, along with the interest from these bonds.
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Cosmo
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quote:
Originally posted by Nath
They wont go bust. Nobody in the Prem will. Hold me to that.
Someone in the PL will, but I agree it wont be United. The problem is though its now a lot harder for the club to be saved from admin than it would of been previously.
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Cavey
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Registered: 11th Nov 02
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What advantage do the people who've paid for the Bonds get? Are they like shares, which will go up in value should they do well? Or is it just a kind of loan to utd from morons who will only get their money back in 7 years?
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Nath
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Registered: 3rd Apr 02
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quote:
Originally posted by Cosmo
quote:
Originally posted by Nath
They wont go bust. Nobody in the Prem will. Hold me to that.
Someone in the PL will, but I agree it wont be United. The problem is though its now a lot harder for the club to be saved from admin than it would of been previously.
Bet they wont. Admin yes, bust and out of extinction, no.
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Cosmo
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quote:
Originally posted by Cavey
What advantage do the people who've paid for the Bonds get? Are they like shares, which will go up in value should they do well? Or is it just a kind of loan to utd from morons who will only get their money back in 7 years?
Basically just an investment where they will get a set amount back yearly and the full amount back at the end of the bond life. You can sell them on if you want, although dont think they will grow in value.
Im not sure if they get any other perks, United could of offered some I guess but dont think they did.
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Cosmo
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quote:
Originally posted by Nath
quote:
Originally posted by Cosmo
quote:
Originally posted by Nath
They wont go bust. Nobody in the Prem will. Hold me to that.
Someone in the PL will, but I agree it wont be United. The problem is though its now a lot harder for the club to be saved from admin than it would of been previously.
Bet they wont. Admin yes, bust and out of extinction, no.
Bust is admin.
Of course someone would then buy them from the administrators as the club brand is worth a fortune.
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Limecat
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quote:
Originally posted by Cosmo
quote:
Originally posted by Ben G
still over 200 million in debt though and personally, you don't have 200M worth of players any more.
They are still the full amount in debt, as bonds are just another form of debt.
I expected the interest rate to be lower than you have form the banks, but according to that its more, which makes you suspect they are up to something that the banks wouldnt allow them to do.
It is quite possibly a compound interest thing? If you start adding interest onto the interest of £41m a year it soon mounts up over time so the interest would become exponential, whilst one can assume, during a financial recovery, that knowing a bond payment is due at a set static rate each year as the value of money increases the actual 'returns' get lower. 
EDIT: Based on £41m they need to generate over £112k net profit per day just to maintain equalibrium! 
[Edited on 23-01-2010 by LETGSI16V]
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