United owners to pay off loans

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The Glazer family, who own Manchester United, are set to pay off £220million of their high-interest PIK loans.

The Glazers' holding company Red Football Joint Venture will pay off the entire payment-in-kind debt next week, according to a voluntary free-payment notice seen by Bloomberg.

The American family will use their own money and not the club's to settle the debt, which carried annual interest of 16.25%.

Joel Glazer, the co-chairman of Red Football, has signed the document which has been sent to the holders of the loan, who are mainly hedge funds. The document says Red Football will "pre-pay 100% of the outstanding loan on November 22".

The move should reassure United fans who have been concerned about the debt burden on the club - now the debt will be solely the £526million bond agreed earlier this year.

Last month United chief executive David Gill insisted that the club could cope with the debt.

Gill told Press Association Sport: "I can't speak for any other club but the United fans should not be concerned.

"We have a long-term financing structure in place, excellent revenues that are growing, we are controlling our costs - total wages are 46% of turnover - and we can afford the interest on our long-term finance.

"In our opinion if something changed in the ownership this club will survive and continue - it is covering the financing cost more than adequately.

"We still have cash to invest in players and to give good contracts to players and we are comfortable with the business model."

Copyright (c) PA Sport 2009, All Rights Reserved.

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