Ratcliffe’s Chemical Empire Reassures Creditors Over Man U Deal

Published 24 October 2023, 15:28:37.592GMT

By Eleanor Duncan, Giulia Morpurgo and David Hellier

(Bloomberg) -- British businessman Jim Ratcliffe’s Ineos Group reassured creditors that he won’t tap companies in his chemical empire to finance a planned offer for a stake in Manchester United.

Executives at Ineos Quattro, a petrochemical unit of Ratcliffe’s group, told creditors on Monday that funding for the football team wouldn’t come from the company. He plans to use his personal wealth for any deal, people with knowledge of the matter said.

The discussions took place on a call this week, which was aimed at updating investors on Ineos Quattro’s strategy and outlook for the chemical industry, the people said.

“Management categorically stated that Quattro’s liquidity would not be available to fund the private projects of Ineos Limited’s owners,” said Jayanth Kandalam, deputy head of Europe at Lucror Analytics, who attended the call.

Ratcliffe has an estimated net worth of about $16.8 billion, according to the Bloomberg Billionaires Index. He’s set to be joined in the Manchester United deal by fellow Ineos shareholders Andy Currie and John Reece, one of the people said.

Two Ineos Quattro creditors, who asked not to be identified discussing sensitive information, said they’re still concerned a Manchester United deal would mean paying more dividends to shareholders, if additional cash is needed for the investment. That’s a particular concern as the chemicals industry grapples with soaring production costs and weaker demand, they said.

A representative for Ineos said the group is in an “extremely strong position” despite the market downturn and is able to take a long-term view on its business.

“It was made very clear on the call that we will not see dividends payments for the purchase of Manchester United, which has nothing to do with Ineos Quattro,” the spokesperson said.

“Any Manchester United transaction would come from sources of the owners.”

Ineos Quattro Business Snapshot

Third-quarter Ebitda plunged 47% to €166 million, the company reported on Friday, citing energy market disruptions due to the war in Ukraine.Net debt stood at €5.15 billion at the end of September 2023. Quattro is “continuing to evaluate different financing alternatives and monitor market conditions in accordance with our financial strategy, including with respect to potential refinancings or extensions of its 2026 debt maturities in the global leveraged loan and high yield bond markets”Quattro’s 2.5% bonds maturing in 2026 have fallen to 90.1 cents on the euro, from 92.6 cents in mid-September

Ratcliffe, who’s chairman of Ineos, is negotiating the purchase of a roughly 25% stake in Manchester United in a deal that could value the club at more than £5 billion ($6.1 billion), Bloomberg News has reported. He would likely then need to make additional investments toward a redevelopment of the team’s Old Trafford stadium and its training facilities.

Football team investing in the Premier League is notoriously cash draining as billionaires and state-backed entities, such as Saudi Arabia-backed Newcastle United FC, compete for trophies, player signings and qualification into the lucrative European Champions League.

--With assistance from Abhinav Ramnarayan.