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Glazers in upbeat mood as United road show gathers pace

MANCHESTER United chief executive David Gill will today pitch the club's £500m bond issue to potential investors in London amid growing confidence in the Glazer camp that the refinancing initiative -- which may include the sale of the club's Carrington training ground -- will be successful.

Gill and United's chief-of-staff, Edward Woodward, will meet major institutional investors, bankers and hedge fund investors in a series of presentations and one-to-one meetings during a three-day road show intended to secure the bulk of the investment.

The road show gives investors a chance to question club management on the fundamentals of the business and make a judgment on the attractiveness of the bond.

United made presentations in Edinburgh yesterday, Hong Kong and Singapore earlier this week and will pitch to American investors next week, and initial soundings from the markets have been positive.

The London road show is central to the bond issue being successful, although warm interest in Asia has encouraged confidence among the Glazers' advisers that the issue will be successful.

While some analysts have expressed scepticism about the attractiveness of the bond in a crowded market, it is understood that significant orders in excess of £50m have already been placed.

There is an expectation within the Glazer team that orders will eventually run into billions.

If that is the case it will strengthen the Glazers' hand when they come to price the bond at the end of next week. The bond issue will remain at £500m, but larger investors may have to settle for a smaller allocation.

The Glazers' optimism stems in part from the general strength of the bond market. There is also a conviction in the Americans' camp that scepticism expressed in the football community and the media at United's business model is not shared by investors.

United's continued profitability and on-field success makes it the most attractive football investment, with pre-tax earnings of £91m last year, up by £10m on the previous season, interpreted as a comfortable cushion against the club's debt, which attracts interest in excess of £40 a year.

"This is a well-run company whose owners have demonstrated it can get bigger and more successful," said one banker with knowledge of the sports market.

While the club's financial performance continues to improve under the Glazers, the demands of servicing and reducing debt means the club have to run to stand still and the bond prospectus contains cautionary notes.

The revelation that the club sustained a £35m loss on interest rate hedges, more than they have spent on any player in recent seasons, raises questions about the financial judgments being made. (© Daily Telegraph, London)

Irish Independent