First Allied Corporation, a holding company for the Glazers’ business interests, owns 68 malls throughout the States. In June, four of these were found to have collapsed, with another one defaulting on its mortgage. Recently, however, four more have failed to pay their mortgages, becoming classified as “delinquent”.
Nine of the 68 malls are now, therefore, either delinquent or insolvent. What’s more, another 29 of these are unable to cover mortgage payments because of the number of empty units.
This news comes at a time when the interest on United’s payment-in-kind (PiK) debts is due to rise from 14.25% to 16.25%. Red Football Joint Venture Ltd, the company the Glazers’ used to buy United, recorded United’s total debts at £716million last year, all of which comes from the Glazers’ personal borrowings to buy the club in 2005.
The PiK debts had risen to £202million by June last year, amassing another £34million interest at 14.25%. Rather than being paid off, the interest accumulates, so £236million is now owed. With the increase in interest rate, £38million will be added over the next year, taking the total to £274million (unless some of the hedge fund debt is paid off).
The reason for the increase in interest rates in unknown, but it is thought that it is a penalty because their debts are over five times their basic profit.
David Gill, the chief executive, claims that the PiK debts are the Glazer family’s responsibility, rather than the club’s. It doesn’t appear, however, that the Glazers have the resources to meet these liabilities. Gill and the Glazers have consistently maintained that the club are not restricted by these debts, and Sir Alex Ferguson has claimed that he has never been refused money for a transfer.
Gill, or anyone else involved with the club, is yet to comment on this news. It’ll be interesting to see how he tries to put a positive spin on this one.
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