£650 million and rising
How the Glazers' debt threatens our club
The Glazer Family paid a total of £921 million to buy United.
They borrowed at least £650 million* of that sum, some at 20% compound interest.
The terms of the debt, which has now been shifted onto the club, means that if it is not paid off it increases to £938 million within 5 years. That means the debt is growing at more than £300,000 per day.* No. We're not kidding.
This isn't our spin on the situation either, for these figures aren't open to interpretation. The numbers above are the facts as spelled out in the Offer Documents posted by the Glazers at Allen & Overy during the bid period. There is ample evidence to indicate that the debt is not only real, it's likely to be crushing.
The debt clock in the sidebar (over there on the right side of the page) gives an approximate debt calculation -- and we've even given the Glazers the benefit of the doubt that the clock didn't start ticking until the end of June 2005!
Sure, you say, the numbers are pretty harrowing, but he must have a plan. They wouldn't have lent him the money without a plan, right?
DEBT UPDATE - MAY 12 2006
At the time of this writing it was assumed that the Glazers would draw down their additional capital facilities of £109 million to yield a total of £650 million in debt with a daily interest cost at a shocking £300,000 per day which, over five years, would add up to £938 million. According to reports from the club, the Glazers never drew on those additional funds. In light of this, the total debt load at inception was £541 million and the daily interest cost was a still-astounding £205,000 per day during year 1.
Now it's year two, and while the some of the debt has been paid, the ticking time bomb known as the PiKs or hedge fund debt are now accruing interest at an even higher rate. This year the total interest cost will be £84.9 million, or about £233,000 PER DAY.
In light of these changes and to present as accurate a picture as possible we have adjusted the Debt Clock accordingly. Our calculations are based on the interest payment/principal repayment schedule from the Glazers so-called business plan.
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