Post date: Wednesday, 4th July 2012

Man Utd choose NYSE over Singapore for IPO as secretive Glazers finally open up over debt


Manchester United Football Club has filed a registration statement with the Securities and Exchange Commission to hold an initial public offering (IPO) of stock and become a listed company on the New York Stock Exchange in a move that could help alleviate some of the club’s heavy debt burden following its takeover by the Glazers in 2005.

The world’s most valuable football club, according to Forbes, had earlier considered a $1bn IPO in Singapore, but shelved the plans due to market conditions. Now it is believed that the Premier League giants may even seek to complete the US IPO later this summer.

The registration document states that the club hopes to raise $100m, but this is just a placeholder figure and could be subject to change. Despite the share sale, the Glazers will retain control of the club through Class B shares, which will come with 10 times the voting power of the stock sold via the IPO.

The Glazer’s have been heavily criticised, particularly by sections of the club’s support, since they bought the team in a leveraged buyout seven years ago.

As of 31 March 2012, the club’s debt stood at £423m, much of it with interest rates in excess of 8%.

This is a figure that has worried many supporters, particularly as Man Utd has already paid out a total of £500m to service this debt since the takeover. And now it seems that the Glazers are finally sharing these cash concerns.

Perhaps the most interesting section of the nearly 300-page document is titled Risk Factors. It is 21 pages long, and highlights risks to the future of Man Utd.

Although it is a legal requirement and the Glazers are duty bound to include it, potential shareholders and supporters will be glad to be able to have a look under the bonnet of the club.

In the prospectus, the Glazers have stated that Man Utd’s indebtedness could "adversely affect our financial health and competitive position" and "affect our ability to compete for players and coaching staff; limit our flexibility in planning for, or reacting to, changes in our business and the football industry; [and] increase our vulnerability to general adverse economic and industry conditions".

This is the sort of statement that the owners and senior executives at the club have avoided making in public since the takeover.

It is also worth noting that the Glazer’s intend to use "all of the net proceeds from the IPO" to reduce debt. But how much will they pay off?

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