LONDON, May 27 (LPC) - Premier League football club Manchester United has drawn £140m of its £150m (US$184.34m) syndicated revolving credit facility (RCF), which could potentially be used to fund player acquisitions, after the club’s operating cash flows were hit by the Covid-19 crisis.
Government restrictions have seen all top-flight football games suspended in the UK since mid-March, heavily impacting broadcasting and matchday revenues. Based on government guidance and agreed medical protocols, play is expected to resume in June.
Manchester United said it precautionarily drew funds from the RCF to increase its cash position, preserve financial flexibility and maintain liquidity during the crisis.
The secured RCF, which matures in April 2025, pays a margin ranging from 125bp to 175bp over Libor/Euribor, depending on leverage.
Bank of America is facility agent and security trustee on the revolver.
Historically the RCF has been undrawn during the summer transfer window, but if the club looked to buy players with values substantially more than the players being sold, it could use cash from the facility to meet its needs.
Manchester United’s main cash requirements stem from the payment of transfer fees, capital expenditure for the improvement of facilities at Old Trafford and the club’s training complex, payment of interest on borrowings, employee benefit expenses, and the payment of dividends.
These expenses are normally met through a combination of operating cash flow and proceeds from the transfer fees.
Despite the crisis, Manchester United will pay a US$0.09 per share cash dividend on June 3.
The club also has US$425m of senior secured bonds maturing in June 2027 and a US$225m secured term loan facility maturing in August 2029. ($1 = 0.8137 pounds) (Editing by Christopher Mangham)