Manchester United to Cut Borrowing Costs After Bond Redemption
Manchester United, which won its 20th English league title this season, may save about 10 million pounds ($15 million) a year by repaying about $290 million of bonds with a loan paying a lower interest rate.
The company plans to redeem 177.8 million pounds of its 8.75 percent bonds and $22.1 million of its 8.375 percent notes, according to a statement. Under the terms of the notes, the pound securities can be bought back at a price of 108.75 percent of face value and the dollar bonds are callable at 108.38, according to data compiled by Bloomberg.
Bank of America Corp. is providing a loan to fund the redemption, the club said. Based on current levels, the financing would pay interest of about 2.78 percent, saving about 10 million pounds a year, it said.
United raised $233 million last year in an U.S. initial public offering with the proceeds used to repay debt. Its borrowings totaled 368 million pounds at the end of March, a fall of 13 percent compared to March 2012, it said earlier this month. It repurchased about 63 million pounds of bonds during the year, paying about 68 million pounds, it said at the time.
The football club earned 60.8 million pounds in broadcast payments as it won this season’s English championship, including 15 million pounds for topping the league.
To contact the reporter on this story: Julie Miecamp in London at firstname.lastname@example.org
To contact the editor responsible for this story: Faris Khan at email@example.com