Manchester United Bonds Soar Amid Qatari Takeover Speculation

Bonds of Manchester United rose to a record amid speculation the 18-time English soccer champion may be sold to the Qatari royal family.

Manchester United’s 250 million pounds ($400 million) of 8.75 percent notes due 2017 were at 111.44 pence in the pound, taking their gain since Feb. 8 to 5.59 pence, or 5.28 percent, according to generic prices on Bloomberg. Newspapers including the London-based Daily Mail reported that Qatar Holding LLC is interested in buying the team.

“A lot of investors expect the Qatar deal to happen now,” said Jonathan Moore, an analyst at Evolution Securities Ltd. in London. “As a result, you would have a stronger owner financially with no real concerns about them taking cash out of the club. Plus, a new owner might decide to take out the bonds, which would mean paying a premium.”

The Qataris were offering 1.6 billion pounds, compared with the 1.8 billion pounds demanded by the Glazer family, the current owners, the Daily Mail reported Feb. 13. Philip Townsend, a spokesman for Manchester United and its owners, said no approach has been made to buy the club, and the team isn’t for sale.

The Glazers, who loaded the club with debt in their 2005 leveraged buyout, are unpopular with Manchester United fans because of the strain they’ve put on the team’s finances.

The club also has $425 million of bonds due 2017, which gained 4.75 cents to 110.875 cents on the dollar, Bloomberg data show.

Make-Whole Clause

Both notes have a so-called make-whole clause, which would force a new owner wanting to redeem the bonds early to make an additional payment equivalent to the present value of the bonds plus a premium. That would probably cost about 100 million pounds, Evolution’s Moore said.

The bonds also have change-of-control clauses, allowing investors to sell them back to the club at 101 pence in the pound.

The team has been the best performer in the Premier League since the Glazer’s 2005 takeover, winning three straight championships between 2007 and 2009 and the 2008 Champions League.

Still, United, which tops the table this year, is overpriced at 1.6 billion pounds, according to Stephen Schechter, founder of London-based investment bank Schechter Co., a sport finance firm that has helped soccer teams including Newcastle United, Southampton and Germany’s Schalke raise money.

“I don’t know today who has the horsepower to buy it,” he said. “I thought the Glazers paid top dollar when they bought it. So if you add 15, 20 percent to that, that’s its maximum. I don’t think it’s worth more.”

Bond holders should cash in while the price is high, Schechter said. “If I saw a bid of 110 I’d sell because until the deal is closed there’s no guarantee that it’s going to close,” he said.