English soccer club Manchester United Ltd. on Tuesday announced its plans for an initial public offering in the U.S. The club, owned by the Glazer family, will reportedly raise $100 million in the IPO.
The company said it intends to use all of the net proceeds from this offering to reduce its debt, which now stands at about 423.3 million pounds. Manchester said its debt could adversely affect financial health and competitive position, as well as its ability to compete for players and coaching staff.
In a filing with the U.S. Securities and Exchange Commission, the company said it intends to apply to list Class A ordinary shares on the New York Stock Exchange. However, the firm did not mention the intended stock symbol, price range or number of shares in the offering.
According to the filing, Manchester United, which termed self as an 'emerging growth company', will have Class A ordinary shares and Class B ordinary shares following the offering with Class B carrying 67% of the voting rights.
Following the offering, Red Football Shareholder Limited, which now owns the team, will become a subsidiary of Manchester United Ltd., a newly formed holding company.
In the offering, Manchester has selected Jefferies, Credit Suisse, J.P. Morgan, BofA Merrill Lynch, and Deutsche Bank Securities as its underwriters.
The club, which has won 60 trophies in its 134-year history, generated revenues of 331.4 million pounds for the year ended June 30, 2011, higher than previous year's 286.4 million pounds. Adjusted EBITDA, a key earnings metric, grew to 109.7 million pounds from 102.4 million pounds in the previous year.
For the nine months ended March 31, 2012, the company generated a profit of 38.22 million pounds, significantly higher than prior year's 13.34 million pounds.
The company generates revenue from three sources - such as Commercial, Broadcasting and Matchday revenues. Commercial revenue grew at a compound annual growth rate of 25.2% through 2011 from 2009. Broadcasting revenue grew at a compound annual growth rate of 9.4%. Matchday revenue in 2011 increased from last year, but fell from 2009.
In the filing, the company said it aims to increase revenue and profitability by expanding high growth businesses that leverage its brand, global community and marketing infrastructure.
The team recently had a disappointing season as it was eliminated from the European club championship before the final knockout rounds.
As per reports, the company last year called off plans for a $1 billion IPO in Singapore amid volatile markets.
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