Hedge funds will control United if Glazer defaults

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Manchester United's transfer spending, contract negotiations, player sales, ticket pricing and commercial deals will all fall into the hands of the hedge funds who are bankrolling Malcolm Glazer's takeover if the American businessman fails to meet certain repayment deadlines.

The hedge funds, which specialise in high-risk lending at high rates of interest, will also, under certain circumstances, have a right to seats on United's board if Glazer fails to meet specific profit targets in his first two years in control.

The consequences are detailed in documents relating to the takeover which are now available for scrutiny at the London offices of Glazer's lawyers, Allen & Overy. Experts who have analysed the paperwork for the Shareholders United fans group said last night that Glazer is operating under an "extraordinary and potentially crippling" repayment schedule that leaves him "no room for manoeuvre".

Aside from bank loans of £265m which alone could cost £570m to repay, Glazer is borrowing £109m for working capital, and £275m in "preferred securities" from three hedge funds. Glazer needs to refinance the securities as quickly as possible to make his debts sustainable. But the documentsreveal he faces a staggering £167m redemption penalty if he redeems them before 2 May next year, or £55m in effective interest for the year (which rises exponentially) if he does not. If he fails to pay back the securities, in full, within 63 months, the hedge funds will effectively take control of United.

United's chairman, Sir Roy Gardner, who on Wednesday announced his impending resignation, had warned that Glazer has provided no guarantees on future debt, transfer budgets or Old Trafford's future. It is now clear such guarantees were impossible because Glazer knows he faces the risk of defaulting control to the hedge funds.

A fans' coalition will meet for a rally on Monday to discuss how to thwart Glazer. Targets will include sponsors Nike and Vodafone, who face boycotts and risk "brand damage".

United announced yesterday that they have released goalkeepers Roy Carroll and Ricardo Lopez, along with six young reserves, Ramon Calliste, Ben Collett, Daniel Nardiello, David Poole, Lee Lawrence and Paul Tierney.