JP Morgan

United and the new increase in PIK Interest

Reports have surfaced recently indicating that the interest rates on Manchester United’s infamous PIK loans have increased from 14.75% to 16.75% because of an inability to repay funds owed to Citadel, Och Ziff and Perry Capital (the three hedge funds with whom the debt was originally taken out), as specified in the terms of United’s debt restructuring back in 2006. So what does this mean for United? Is the price to pay for this situation a scaling back of investment in new players or price hikes as we fans often fear? It’s probably best to start from the beginning to see where this could lead to.