Thursday, December 9, 2010

PIK repayment: The Glazers issue shares to someone (or maybe themselves)....


Two of the Glazers' UK holding companies; Red Football Joint Venture Ltd (the company which owed the PIKs) and Red Football Shareholder Ltd (its parent) filed documents with Companies House today. The two identical documents are dated 22nd November 2010 (the day the PIKs were repaid) and are records of Ordinary Resolutions of each company authorising them to:

"....allot ordinary shares in the Company or grant rights to subscribe for, or convert any security into, ordinary shares in the Company...."

That means the companies are now authorised to issue new shares (or rights to subscribe for or buy new shares).

You can download the documents here for RFJV and here for RFS (if you really want).

So what's going on?

Well all we know for certain from this is that in order to pay off the PIKs, the Glazers are issuing more equity (or rights to equity) in one or both of United's parent companies. The mystery of course is who they are issuing such equity to.

It could of course be themselves. If they have found the £243m needed to repay the PIKs down the back of a sofa in one of their many Florida properties, they could be subscribing for more shares themselves using that money. Or it could be a third party who has provided finance to repay the PIKs (i.e. new debt for old).

Will we ever know? It's hard to say, as it depends on the exact structure used in any refinancing and whether it took place in the US or UK.

There will be a "post balance sheet event" note in the RFJV and RFS accounts when they are published in the new year. That may tell us more.

Watch this space.

LUHG