BANKRUPTCY

Malcolm Glazer's restructured bid for Manchester United contains similar elements of financial risk that led to his initial offer for the club being described as a "ticking time bomb" for the club.

The initial bid was rejected by United's board for being overly leveraged, or in laymen's terms, too reliant on debt. United confirmed to the Stock Exchange yesterday that they have now received details of the revised bid. Shares in the club rose 4.8 per cent to close at 281p last night.

Yet it is understood that the revised deal differs from the original proposal in only two key areas. The proposed sale of the stadium has been scrapped, and instead of Glazer borrowing £500m from JP Morgan, he will borrow only around £300m. Contentiously, another £200m-£250m would come from issuing "preferred stock", or special shares, which Glazer hopes will not be considered as a conventional debt burden.

The potential problem for Glazer is that United's board might consider the preferred stock as "disguised debt", or up-front investment that would still need to be repaid at a fixed period in the near future, possibly three years after any takeover.

But if the board accepts it as equity and recommends Glazer's bid, the end result could still theoretically lead to a debt-ridden United struggling to repay its preferred stock investors a few years down the line. "The bigger picture is how [Glazer] would end up paying it back," Lee said.

In other words, the same financial risks could apply to the new bid as to the first bid.

United's five-man board is expected to meet legal representatives today in Manchester to discuss Glazer's latest bid. The board is led by the non-executive chairman Roy Gardiner, and also comprises the club's chief executive, David Gill, finance director Nick Humby and non-executives Ian Much and the recently appointed Goldman Sachs banker Jim O'Neill. The meeting did not happen yesterday because Gill was at a Uefa meeting in Geneva.