The AC Milan’s deal saga suddenly had a special outcome. Calcio e Finanza revealed secret documents highlighting Yonghong Li’s decision to go ahead alone to obtain the majority stake in the Red-and-Black of Milan. The Chinese investors, thanks to the help of U.S. private equity fund Elliott got the necessary financial resources to set up a new closing date with Fininvest.
According to Reuters, “U.S. fund Elliott rescued former Italian prime minister Silvio Berlusconi’s deal to sell soccer club AC Milan, throwing a financing lifeline to Chinese investors who were struggling to complete the transaction.”
In August, Fininvest S.p.a, Silvio Berlusconi’s holding company, agreed to sell the club for € 740 million ($806 million), including € 220 million in debt, to a Chinese consortium. However, something went wrong in the group of investors that were interested in the deal. Due to the new regulations implemented by the government of Beijing on the capital exported abroad for investment in sports, Yonghong Li was unable to meet his economic commitments with the former Italian prime minister.
As Calcio e Finanza stated, the deal was at risk but suddenly something happened and apparently the acquisition is going on and will be finalized on April 14th, 2017, eight months and two postponements after it was agreed upon.
Reuters also highlighted the situation of the club mentioning that “AC Milan, seven-times European champions but without any major silverware in the past six years, are losing money and need a deep-pocketed investor who can inject funds to buy match-winning players and invest in the brand at home and abroad. In a wider push to reduce debt, Berlusconi decided to sell the club because he was unwilling to stump up the extra money required for the team to compete with the top European clubs, many now bankrolled by wealthy Gulf and Asian owners.”
April 14th will probably be a historical day for AC Milan fans around the world. After many years of Berlusconi’s presidency, the club will be formally sold to the Chinese consortium which has paid €250 million in four tranches and that will provide further € 270 million for the rest of the purchase price being paid in the form of assumed debt.
Reuters also highlighted that “the U.S. fund will provide € 180 million to complete the acquisition and another € 73 million to help the club cover short-term payments, said a lawyer working for AC Milan and Yonghong Li, the entrepreneur leading the consortium, confirming earlier reports by daily Corriere della Sera.”
Elliott’s total exposure will be about € 300 million. An additional € 50 million would be invested in the club. A source interviewed by Reuters mentioned that the U.S. fund has “some form of guarantee” over the financing and that a stock market listing is a possibility, but not in the short term.” The Luxembourg-based Rossoneri Sport Investment Lux will, therefore, replace the original Chinese bid vehicle, Sino-Europe Sports Investment Management to finalize AC Milan’s acquisition.