PIKing and choosing

17 May 2005

The payinkind financing Glazer used to buy the football club isn’t the usual kind. He has juiced it up with security and a high yield. The PIK market turned some time ago. Glazer’s PIKs are a posttopofthemarket phenomenon.

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Malcolm Glazer is financing his bid for Man Utd with £275m of payinkind (PIK) debt, which pays interest not in hard cash but rather in the form of new bonds.

Three USbased hedge funds have agreed to buy the PIK debt, according to reports. They are: Citadel, OchZiff Capital Management and Perry Capital.

The debt will reportedly pay an 18% interest rate and offer security over Glazer family assets, including shopping malls and the Tampa Bay Buccaneers American Football franchise.

In common with some of the more recent issuers of PIKs, Glazer is thought to have structured his PIKs in the form of loans rather than bonds.

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