Manchester United owners the Glazer family have been hit with a steep rise in their annual debt payments after exceeding a limit on their overall borrowings which form part of their controversial PIK loans agreement..
The Glazers used the high interest form of financing to help raise the funds for their £790m takeover in 2005.
But the loans, originally worth £265m and taken out with three hedge funds - Citadel, Och Ziff and Perry Capital - but reduced to £138m as part of a 2006 refinancing, include strict covenants relating to net debt levels and the club's earnings.
Failure to meet the borrowers' terms by 16 August meant the annual interest rose from 14.25% to 16.25%.
Analysts predict the annual payment will now increase to about £38m, up from £25m last year. Because the interest on the loans is "rolled up" and added to the original sum borrowed the Glazers will owe around £267m on the PIK loans by 2011 - almost a £100m increase in only five years.
Duncan Drasdo, a spokesman for Manchester United Supporters Trust (MUST), said: "The Glazers' PR people claim this PIK debt is nothing to do with Manchester United but we believe in the next 12 months accounts will start to show them taking even more money out of our club.
"They've already wasted more on interest and fees than the total sum of all season ticket money paid by every supporter in their entire five year ownership.
"On top of all that how much more will this extra interest cost us? A Chicarito per season? A Rooney over the term of the debt? Imagine what we could achieve if released from the millstone of the Glazers' ownership."
