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By ESPN Staff
Aug 20, 2010

Interest rates rise on United owners' PIK debt

Manchester United's anti-Glazer faction fear huge sums of cash are going to be heading out of Old Trafford following a steep rise in the interest rates on controversial payment-in-kind notes raised to complete the family's takeover in 2005.

Apparent failure to meet set terms laid down in the PIK loan agreement by August 16 meant that the interest rates have shot up from 14.25% to 16.25%.

United chief executive David Gill has always stressed that as these loans are lodged against the owners rather than the club, they have no direct effect on life at Old Trafford.

However, the Manchester United Supporters Trust (MUST) noted at the time of a huge refinancing exercise earlier this year, when a £504 million bond issue proved to be highly successful, that the small print allowed the Glazer family to take £95 million out of the club's reserves. And MUST chairman Duncan Drasdo believes the clause was inserted for a reason.

"We believe in the next 12 months accounts will start to show them taking even more money out of our club,'' he said. "They have already wasted more on interest and fees than the total sum of all season ticket money paid by every supporter in their entire five-year ownership.

"On top of that, how much more will this extra interest cost us per season? Imagine what we could achieve if released from the millstone of the Glazers' ownership.''

MUST had been pinning its hopes on a successful bid from the Red Knights group last spring following previous suggestions they were willing to complete a purchase of the club that would leave the Glazer family with a small profit.

However, with talk of a bid having to hit £1.5 billion for the Glazers to be interested, the Red Knights eventually decided to back down. It is understood the group are monitoring developments and would be willing to step in if the price dropped to a more realistic level.

Yet the Glazers have never given any indication of wanting to sell, even though their PIK debt, which originally stood at £265 million and was then reduced to £138 million, will end up rising to around £267 million next year.

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