Page last updated at 16:54 GMT, Friday, 22 January 2010

Manchester United raise 504m in bond issue

By Bill Wilson
Business reporter, BBC News

Old Trafford
Manchester United was bought by the Glazers in 2005

Manchester United have successfully raised £504m through a bond issue, which will cover most of what the club owe to international banks.

The deal means the Premier League club will be able to pay off nearly all their outstanding debts of £509m.

They will face an annual interest bill of £45m a year on the bonds.

The sale comes after figures showed debts at the club's parent firm, Red Football Joint Venture, rose to £716.5m ($1.17bn) in the year to June 2009.

Pounds and dollars

The bond was sold in two tranches, one of £250m with a coupon rate - or interest rate - to bond holders of 8.75%, and another tranche of $425m with a coupon rate of 8.375%.

However, unlike the debt at present secured against the club, the seven-year bonds will not mature until 1 February 2017.

The annual interest bill on the bonds is close to the £41.2m in interest paid in the last financial year.

But by converting the money owed to banks into a bond, it means the club will be free of the potentially strict financial conditions imposed by lenders.

On Thursday, it was confirmed that the club had signed a three-year sponsorship deal with Turkish Airlines to take over as the club's official carrier.

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