Leaked details of his original buy-out proposal, published yesterday in the journal Legal Business, confirmed that Glazer intended to borrow pounds 500m from the investment bank JP Morgan to help fund a takeover then estimated at pounds 815m. Other key factors in the original plan included selling Old Trafford for pounds 175m in a leaseback scheme, renaming the stadium in a pounds 15m-a-year rights deal, and hiking ticket prices to help repay Glazer's borrowings.
An anonymous analyst, described by the journal as "close to JP Morgan", examined the the original bid and concluded that if any one part of Glazer's debt-driven plan fell through, "then the club will struggle to pay its debt and could end up bankrupt. The financial burden would be a ticking time bomb."
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 pounds 500m from JP Morgan, he will borrow only around pounds 300m. Contentiously, another pounds 200m-pounds 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.
The board's dilemma is that arguing that the preferred stock is debt may be impossible. "Technically it's equity," said Andrew Lee, a City analyst with Dresdner Kleinwort Wasserstein.
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.
Glazer has shrouded his plans in secrecy, keeping details limited to an inner coterie on a "need-to-know" basis. Such measures have been taken partly for the protection of those working with him. Legal Business reported that an unnamed senior partner in the legal firm Allen & Overy, which is acting for Glazer, attended last year's United AGM with a bodyguard in case United fans became hostile.
Informed sources say the partner was Andrew Ballheimer, an English lawyer who was hand-picked by Glazer to work on the case because of the excellent reputation he earned in New York, where Glazer came to know of him.
Some 50 staff at Allen & Overy are working on the United deal, and have been warned to be "vigilant" to attacks from militant anti-Glazer United fans. The firm has already been bombarded by an assortment of e-mail threats, black faxes and abusive phone calls.
A spokeswoman for Allen & Overy declined to comment on whether Ballheimer was working for Glazer and denied suggestions that senior figures from the firm are currently using 24-hour security to protect them.
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.
If the United board does indeed recommend Glazer's bid to shareholders, the 76-year-old American will still need to broker a pivotal a deal with J P McManus and John Magnier before taking over. The Irishmen own 28.89 per cent of United, a stake they would sell at the right price.