The Notes will be guaranteed by the Parent and the Subsidiary Guarantors. These Note Guarantees will be joint and several obligations of the Guarantors. The obligations of each Guarantor under its Note Guarantee will be limited as necessary to prevent that Note
Guarantee from constituting a fraudulent conveyance under applicable law. See ‘‘Risk Factors—
Risks Related to Our Debt and the Notes—We are subject to English insolvency laws, which pose certain risks for holders of the Notes’’.
The Note Guarantee of a Subsidiary Guarantor (other than Manchester United Limited and Red Football Junior Limited) will be released:
(1) in connection with any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger, consolidation, amalgamation or combination) to a Person that is not (either before or after giving effect to such transaction) the Parent or any of its Restricted Subsidiaries, if the sale or other disposition does not violate the ‘‘Asset Sale’’ provisions of the Indenture;
(2) in connection with any sale or other disposition of Capital Stock of that Subsidiary
Guarantor to a Person that is not (either before or after giving effect to such transaction) the Parent or any of its Restricted Subsidiaries, if the sale or other disposition does not violate the ‘‘Asset Sale’’ provisions of the Indenture and the Subsidiary Guarantor ceases to be a Restricted Subsidiary as a result of the sale or other disposition;
(3) if the Parent designates any of its Restricted Subsidiaries that is a Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the
Indenture;
(4) upon repayment in full of the Notes;
(5) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided below under the captions ‘‘—Legal Defeasance and Covenant Defeasance’’ and ‘‘—Satisfaction and Discharge’’; or
(6) in connection with an enforcement sale pursuant to the terms of the Intercreditor Agreement.
In addition, the Note Guarantee of the Parent, Manchester United Limited and Red Football Junior Limited will be released:
(1) upon repayment in full of the Notes; or
(2) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided below under the captions ‘‘—Legal Defeasance and Covenant Defeasance’’ and ‘‘—Satisfaction and discharge’’.
Security
General
The Notes and the Note Guarantees will be secured by first-ranking Liens over the Collateral.
Subject to the terms of the Indenture and the Intercreditor Agreement, certain other Indebtedness will be permitted to be secured by the Collateral now and in the future. The Collateral will be pledged pursuant to the Security Documents to the Security Agent on behalf of the holders of the secured obligations that are secured by the Collateral, including holders of the Notes.
The collateral (the Collateral) will consist of the following properties and assets:
(1) all of the Capital Stock in the Issuer and each Subsidiary Guarantor; and (2) substantially all of the property and assets of the Issuer and the Guarantors.
Under the Indenture, the Parent and the Restricted Subsidiaries will be permitted to incur certain additional Indebtedness in the future which may share in the Collateral, including additional Permitted Collateral Liens securing Indebtedness on a pari passu basis with the Notes, including Indebtedness under the Revolving Credit Facility and certain Hedging Obligations. The amount of such Permitted Collateral Liens will be limited by the covenants described under the captions ‘‘—Certain Covenants—Liens’’ and ‘‘—Certain Covenants—
Incurrence of Indebtedness and issuance of preferred stock’’. Under certain circumstances, the amount of such additional Indebtedness secured by Permitted Collateral Liens could be significant.
The obligations under the Notes and the Revolving Credit Facility and certain Hedging
Obligations will be secured equally and ratably by a first-ranking Liens over the Collateral but, any liabilities in respect of obligations under the Revolving Credit Facility and certain existing Hedging Obligations will receive priority with respect to any proceeds received upon any enforcement action over any Collateral.
The proceeds from the sale of the Collateral may not be sufficient to satisfy the obligations owed to the holders of the Notes. No appraisals of the Collateral have been made in
connection with this offering of the Notes. By its nature, some or all of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, the Collateral may not be able to be sold in a short period of time, or at all. See ‘‘Risk Factors—Risks Related to Our Debt and the Notes—Under the intercreditor agreement, the holders of the Notes will be required to share recovery proceeds with other secured creditors, have certain limitations on their ability to enforce the security documents and have agreed that the collateral may be released in certain circumstances without their consent’’ and ‘‘Risk Factors—It may be difficult to realise the value of the collateral securing the Notes’’.
Security Documents
Each of the Issuer and the Guarantors will enter into a debenture (the Debentures) with the Security Agent granting a first-ranking fixed and floating charge over substantially all of the property and assets of the Issuer or such Guarantor, including the Proceeds Loans. In addition, certain Guarantors will enter into mortgages (the Mortgages and together with the
Debentures, the Security Documents) with the Security Agent granting a first-ranking security interest in all real estate owned by such Guarantors (other than real estate related to the Carrington Premises training grounds). Subject to the terms of, and limitations under, the Security Documents, these security interests will secure the payment and performance when due of the obligations of the Issuer and the Guarantors under the Notes, the Indenture, the Note Guarantees and the Security Documents.
Subject to the terms of the Indenture, the Revolving Credit Facility and the Security Documents, the Issuer and the Guarantors will have the right to remain in possession and retain exclusive control of the Collateral securing the Notes, to freely operate the Collateral and to collect, invest and dispose of any income therefrom.
The Security Documents will, as described under the caption ‘‘Description of Other
Indebtedness—Intercreditor agreement’’, permit the Trustee and the agent for the Revolving Credit Facility to instruct the Security Agent to take enforcement action under the Security Documents following the occurrence of an event of default under such Indebtedness, such Indebtedness being declared due and payable and the requisite approval or consent of the holders of such Indebtedness and completion of a consultation period of 30 days.
Release
The Issuer and the Guarantors will be entitled to the release of the Liens over property and other assets constituting Collateral securing the Notes and the Note Guarantees under any one or more of the following circumstances:
(1) in connection with any sale, assignment, transfer, conveyance or other disposition of such property or assets that does not violate the ‘‘Asset Sale’’ provisions of the Indenture;
(2) in the case of a Subsidiary Guarantor that is released from its Note Guarantee pursuant to the terms of the Indenture, the release of the property and assets, and Capital Stock, of such Subsidiary Guarantor;
(3) if the Parent designates any of its Restricted Subsidiaries to be an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture, the release of the property and assets of such Restricted Subsidiary;
(4) upon repayment in full of the Notes;
(5) upon legal defeasance, covenant defeasance or satisfaction and discharge of the Indenture as provided below under the captions ‘‘—Legal Defeasance and Covenant Defeasance’’ and ‘‘—Satisfaction and discharge’’;
(8) in connection with an enforcement sale pursuant to the Intercreditor Agreement Intercreditor agreement
On the Issue Date, the Trustee shall enter into an Intercreditor Agreement with, among others, the agent under the Revolving Credit Facility and the counterparties to certain Hedging
Obligations, as described under ‘‘Description of Other Indebtedness—Intercreditor agreement’’.
Pursuant to the terms of the Intercreditor Agreement, any liabilities in respect of obligations under the Revolving Credit Facility and such Hedging Obligations will receive priority with respect to any proceeds received upon any enforcement action over any Collateral.