Glazer's extra debt of £109m for United

Malcolm Glazer intends to borrow £109m more than previously believed to fund his takeover of Manchester United, his formal offer document revealed yesterday, and it seems likely that the club itself could be loaded with debts of £649m by the end of the year.

Malcolm Glazer intends to borrow £109m more than previously believed to fund his takeover of Manchester United, his formal offer document revealed yesterday, and it seems likely that the club itself could be loaded with debts of £649m by the end of the year.

The figures are certain to horrify supporters who are concerned that United, which until now has been a profitable, debt-free company, will be susceptible to serious financial problems if Glazer's "aggressive" business plan ­ as the club's board termed it ­ does not perform to his expectations.

Fans will have to wait for details about the plan because none are provided in the offer document and, contrary to expectation, Glazer's son Joel will not be issuing an open letter to fans, making promises about a transfer kitty or giving other assurances.

Instead, the Glazer family will wait at least three weeks to open any dialogue with fans. It was claimed last night that Joel Glazer will meet United manager Sir Alex Ferguson face to face for the first tomorrow, but the Glazer family may even wait until they have delisted the club from the Stock Exchange before they inform fans of their plans. Glazer intends to de-list United as early as 22 June, "or as soon thereafter as is practicable", his bankers NM Rothschild said yesterday. Rothschild made the statement after posting Glazer's offer document to shareholders, thereby kickstarting the process of buying the remaining shares he does not already own.

Glazer owns 76.2 per cent of United and hopes to secure the rest by 2pm on 13 June, when his 300p-per-share offer to the shareholders of the remaining 23.8 per cent closes.

If there were doubts about the costliness of Glazer's purchase of United before yesterday, then the red devil was in the detail provided by the offer document. Not only will Glazer and/or United be paying higher interest rates than assumed on large portions of the debt, but the overall borrowing will be much higher than assumed.

On top of £272m of family money (some or all of which might be borrowed), it was already known Glazer intended to borrow another £275m in "preference shares" and £265m from banks to fund his buyout.

But the document also shows he has an additional bridging facility of £18.9m (at an interest rate of around 7.75 per cent), plus a "revolving credit facility" of £50m for working capital,

and a capital expenditure facility of £40m. It is thought the bridging facility will be necessary if nearly all remaining shareholders sell to him, as is now expected.

The working capital will provide a transfer kitty for one or more years. The capital expenditure facility may be used to expand Old Trafford. The upshot is £109m of extra borrowing, at interest rates higher than anticipated by analysts.

Once the club is de-listed, Glazer will transfer £265m of bank loans on to the club's books, followed by the £275m "preference share" debt as part of a refinancing package. The £109m on top will take the club's direct liabilities to £694m.

The offer document shows the lowest rate of interest that Glazer has agreed to pay on any portion of the borrowing so far is 2.75 per cent above base rate, or 7.55 per cent. If that was replicated across all the loans, United will be paying more than £52m a year in interest alone. Yet the figure could be even higher. The offer document also reveals that one particular £85m lump of the £265m bank loan will attract an interest rate of 6.5 per cent above base, or 11.3 per cent.

It has been established that Joel Glazer will take day-to-day charge of his family's interests in United. The United board, who will have noted from the document that the Glazers have made no provision to compensate them "for loss of office", should they walk away, have 14 days to make a formal response. As Glazer effectively controls the club, it seems inevitable that United's chief executive, David Gill, will recommend the offer to shareholders.