Manchester United Plans Bond Issue to Refinance Debt

Premier League soccer club Manchester United has launched a £500 million ($801.4 million), seven-year high-yield bond that will be used to refinance existing debt, banks working on the deal said Monday.
J. P. Morgan Chase Co., Bank of America Merrill Lynch, Deutsche Bank AG, Goldman Sachs Group Inc., Royal Bank of Scotland Group PLC and KKR Financial are joint-lead managers on the deal.

The senior, secured bond will be issued by the club's subsidiary, MU Finance PLC. The deal is expected to be priced towards the end of next week. Roadshows will be held in Asia Monday and Tuesday, in Europe from Jan. 13 until Jan. 18, and in the U.S. for a week from Jan. 19.

Manchester United has a £700 million debt load, which was incurred in 2005 when U.S. entrepreneur Malcolm Glazer and his family bought the club in a £790 million leveraged buyout. Financial results released by the club Monday showed Manchester United still owes £509.5 million in secured bank loans.

People familiar with the matter have previously told Dow Jones Newswires that the bond issue will pay off senior bank debt first and, depending on the size of the issue, also repay some of the club's £135 million payment-in-kind debt, which carries an interest rate of 14.25%. Payment-in-kind debt is where interest is paid via the issuance of new debt, rather than in cash.