FOOTBALL giant Manchester United announced late last night that it has taken measures to cut its considerable interest payments by refinancing over £200m of debt.
The new loan will be provided by Bank of America, United said, refinancing £177.78m of its outstanding sterling bonds and $22.09m principal of its US dollar bonds. It could save the club around £10m a year, according to the statement.
United was paying 8.75 per cent and 8.375 per cent respectively, but will now pay a rate of Libor plus somewhere between 1.5 per cent and 2.75 per cent each year.
The refinancing appears to be the latest move to strengthen the hand of United, the wealthiest club in England.
Earlier this week it was revealed that the 2012-13 Premier League winners made £60.8m in TV revenues from their on-the-pitch triumph, more than any other team. The figure should rise again next season, due to a far larger pot of TV cash.
But Joshua Raymond of City Index told City A.M. that the new debt deal risks turning into an own goal. “The new interest rate is variable, so when interest rates do start to rise the £10m annual savings will start to recede.”
Nonetheless, the deal is still “a step in the right direction for the long term debt sustainability of the club,” Raymond added, citing United’s strong commercial sales.