SBD/July 5, 2012/Franchises

Manchester United Files For IPO In U.S., Hopes It Will Help Tackle Debt

Shares of ManU will be split into two classes on the U.S. Stock Exchange
EPL club Manchester United owners the Glazers "have signalled their intention to move the club's registration to the tax haven of the Cayman Islands and float its shares on the New York Stock Exchange," according to David Conn of the GUARDIAN. The U.S. Stock Exchange registration statement said that the principal intention "is to sell enough shares to new investors to pay off an as yet unspecified portion of United's [US$658.23M] debts, which the Glazers loaded on to the club when they bought it in 2005." The registration statement "makes it clear that the Glazers have reorganised the ownership of United, via the Cayman Islands, so they can realise cash from investors while retaining control of the club." The ManU shares will "be split into two classes, A and B; the A shares will be offered for sale to investors on the New York Stock Exchange while the Glazer family will retain ownership of the B shares, which carry 10 times the voting rights of the A shares." Not only will investors "have diluted voting rights but there is no intention even to pay them a regular dividend, so the investment would be to realise some future gain via the Cayman Islands if they sell the shares." The registration statement "does not set out yet how many A shares will be sold on the market, nor the price which will be set, and therefore the total by which the family is seeking to reduce United's huge debt" (GUARDIAN, 7/4).

REASONS FOR U.S. FLOATATION: The FINANCIAL TIMES' Roger Blitz notes a listing in Asia "would have seen the owners exploiting interest in the club from fans in the region." An equivalent push "in the US is unlikely to happen." But one of the "motivations for listing the shares in the US is to enable the Glazers to use a dual-class share structure, and thereby retain control" (FINANCIAL TIMES, 7/5). The WALL STREET JOURNAL's Futterman & Clark noted United would be "one of the first sports teams to go public in the U.S. in more than a decade." Data tracker Dealogic indicated the last team to do so was the Indians, which launched in '98 and "was later taken private" (WSJ.com, 7/4). The AP's Ronald Blum noted the deal "could ease pressure on the club's cash flow as it tried to keep and acquire players in an attempt to regain English and European titles." While the stock price and the number of shares "were not listed, the registration statement said the club hoped to raise a maximum of $100 million -- a place-holding figure that could change before the offering becomes effective" (AP, 7/4). However, in London, James Ducker writes the Glazers "managed to distance themselves more than ever with a fanbase doubtless hoping that the club will be sold rather than, as curiously stated in the document, passed down to the 'linear descendants' of Malcolm Glazer" (LONDON TIMES, 7/5).
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