Red Knights to target Glazers debt in bid for Manchester United

By Paul Kelso Published: 7:00AM GMT 03 March 2010

Green-and-gold brigade: a Manchester United fan waves a headband that are used by fans in critique over the reign of the bar by the Glazer family Photo: GETTY IMAGES

The Knights, a consortium of abounding people led by Goldman Sachs arch economist Jim O"Neill, are accepted to be deliberation shopping portions of the debt to benefit precedence over the Glazers.

It is one of multiform options being discussed as they try to wed their monetary imagination and personal resources to an assumingly overwhelming groundswell of believer backing.

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The Glazers" make make make use of of of of debt to buy the bar is the principal conflict of supporters opposite to the Floridians, and there will be a honeyed irony for majority fans if they conduct to spin the leveraged squeeze opposite them.

The debt is separate in to dual portions. Around �202 million of costly payment-in-kind (PIK) loans reside with a organisation of New York sidestep supports at seductiveness rates of 14.25 per cent rising to some-more than sixteen per cent, with the superfluous �507 million due to investors who took up the new down payment issue.

One choice being deliberate by the Red Knights is to buy up the PIK loans, creation them in between the Glazer"s principal creditors. They could additionally aim the bonds, giving them change over the family.

Either track would vigilance a bid for the Glazers" ownership.

Hostilities were strictly spoken on Tuesday when O"Neill led his consortium and their multitude of green-and-gold-clad supporters over the barricades. After headlines of a assembly in between O"Neill and his associates emerged on Monday, Tuesday brought acknowledgment that the lax bloc of financiers was precision the sights on United.

The central line from the Glazers" orator was sanguine. "Manchester United is not for sale, and it"s commercial operation as usual," he said. It was a predicted reply from owners who have demonstrated a rhino"s-hide insurgency to critique in their five-year reign at the world"s richest club.

The family"s on all sides was bolstered by formula that showed income up nineteen per cent, from �121.7 million to �144 million, for the 6 months to December 2009, mostly due to increasing Champions League income.

The accounts additionally suggested the cost of the down payment issue, with �24 million taken from income pot to cover fees. The accounts additionally divulge that "further income … is accessible for the association to make make make use of of of at the discretion".

It is thought this is a anxiety to a division of up to �95 million the Glazers are available to take out of the bar underneath the conditions of the bond. The accounts additionally showed income pot of �98 million.

It is this make make make use of of of of the bar to account merger debt that has angry supporters, and the Knights intend to strap that disquiet.

While the plan might see to a little a classical box of millionaires high on the greasepaint-whiff of football, the Knights, for all their self-aggrandising title, have substance. O"Neill is in between the majority reputable economists in the UK. He is a former non-executive senior manager of United who opposite the Glazer takeover, and he stays close to United arch senior manager David Gill.

His impasse is not but personal jeopardy. A orator for the Knights stressed that he was behaving in a personal capacity, but his on all sides has already brought a personal involvement from the Glazers, who are accepted to have contacted Goldman"s New York head bureau to protest after he went on the jot down to contend there was "too most leverage" at United.

O"Neill is assimilated by similarly convincing figures. Mike Rawlinson, a partner at City law organisation Freshfields, was an confidant to United when the Glazers targeted the bar in 2005 and additionally knows Gill.

Paul Marshall, a partner at sidestep account Marshall Wace, and Richard Hytner, emissary authority of Saatchi and Saatchi, are additionally involved, as is investment landowner Keith Harris.

They are a challenging organisation but to overcome questioning in the City and feeling in Florida they will need to furnish a convincing suggest in the face of the extreme complexities their aspiration poses.

As well as the debt options they are deliberation a candid bid. This would need upwards of �700 million to suggest the Glazers at slightest twice the �272 million they privately put in to the strange takeover and to prove the PIK loans.

Any understanding is serve difficult by the conditions of the down payment issue, that need any new owners to set free them all at 101 per cent, an one more cost of �512 million. The Knights hold they might be equates to to reach agreement with the down payment investors, but they still need a outrageous fund-raising effort. They will find to emanate a "top tier" of as majority as 40 investors putting in �10 million each, with a pyramid of not as big investors underneath.

If they attain they will additionally need to emanate a equates to of catering for the opposite mandate of investors, a little of whom will instruct a lapse whilst others are happy to palm over their income in sell for saying their name forged on a Knights honours house at Old Trafford.

None of this is insurmountable, but in the face of assumingly stern antithesis from Florida, the Knights have a prolonged approach to go prior to they reach Jerusalem.