Soccer club Man Utd refinances to cut interest costs
LONDON May 24 (Reuters) - English soccer champions Manchester United have trimmed 10 million pounds ($15 million) off the annual interest bill on their debt through a refinancing arranged by Bank of America.
The move could free up more cash to help new team manager David Moyes to strengthen his team for next season after taking over from Alex Ferguson, who retired this month after leading United to 13 English league titles.
The American Glazer family bought United for 790 million pounds ($1.2 billion) in 2005 but burdened the club with heavy debts. A vocal section of United fans have argued that high interest payments have forced up ticket prices and diverted cash that should have been spent on players.
United's debt currently stands at 367 million pounds and the club made interest payments of 46 million pounds in the nine months to the end of March, its latest earnings release showed.
Under the new financing deal the club's MU Finance subsidiary is redeeming bonds with a total value of around $290 million and taking a new loan facility with Bank of America. Interest on the new loan has been set at Libor (London interbank offered rate) plus 1.5 to 2.75 percent per year.
"If calculated today, we estimate that the starting rate of interest would be approximately 2.78 percent, resulting in an interest reduction of around 10 million pounds per year," United said in a statement issued late on Thursday.
United are going through a period of management transition, with Executive Vice-Chairman Ed Woodward taking on more powers after Chief Executive David Gill said he was stepping down at the end of June.