This latest development does appear to confirm repeated statements from Sir Alex Ferguson that he has a large transfer kitty at his disposal and he alone is responsible for it not being spent rather than being kept back to pay off a portion of the
PIK debt.
These
PIKS carry a 16.25% interest rate and unless any payments are made these loans will spiral to pounds 600m by 2017.
These
PIKS carry a 16.25% interest rate and unless any payments are made they will spiral to pounds 600m by 2017.
Included in the high-yield bond funding may be zero-coupon bonds or their close relative, payment-in-kind (
PIK) securities.
Supporters opposed to the Glazers have always claimed that such talk was false, with the money being earmarked for the
PIK loans, which are now attracting interest at an eye-bulging 16.25% Last month United reported losses of pounds 83.6m, with more than pounds 40m attributable to interest payments on the pounds 500m bond issue, and accrued interest on the
PIK loans.
Supporters opposed to the Glazers have always claimed that such talk was false, with the money being earmarked for the
PIK loans, which are now attracting interest at an eye-bulging 16.25% Last month United reported losses of pounds 83.6 million, with more than pounds 40 million attributable to interest payments on the pounds 500 million bond issue, and accrued interest on the
PIK loans.
Since many of the holders of
PIK or deep discount bonds are tax-exempt pension trust or foreign holders, however, no one is likely to complain about the lack of symmetry in view of the fact that the OID accrual otherwise is a tax-neutral event.
(It's called the "Payment in Kind' program, or
PiK for short.) That proved a logistical nightmare.