October 2 – The uncertainty around AC Milan’s ownership is continuing with Li Yonghong, who only took over in April, already looking for new investors to share the burden of the debt at the loss-making club.
AC Milan is 99% owned by a Luxembourg-based vehicle, Rossoneri Sport Investment Lux, which is controlled by Chinese investor Yonghong. He completed the deal only after a protracted negotiation with former owner Silvio Berlusconi and various extensions to the completion date while he raised the finance.
On completion of the €740 million deal – which included assuming €200 million of debt – club chief executive Marco Fassone said that the club needed its own stadium – it currently shares with Inter – and that further finance could be raised from a stock market listing.
Reports by Reuters suggest that the need for new money into the club is becoming acute. The hope of other Chinese investors has evaporated as the government has cracked down on what it views as essentially vanity investments in European clubs (AC Milan is the biggest Chinese investment in a European club to date). A relaxation of that government stance could open the door for new money from China but it looks unlikely.
A more likely source of help could be from the US, reports Reuters.
First step looks likely to be a refinancing the debt with US private equity fund Elliott which financed the closing of the deal with a €180 million loan and a further €128 million to fund player acquisitions – the club desperately needs to get back into the bigger league money of Champions League football. AC Milan reported a €75 million loss for 2016.
Currently the interest rate on the loans is at a chunky 10% and needs to be repaid by October 2018. Goldman Sachs and Merrill Lynch are said to be in the running for the refinancing.
After seven games AC Milan currently lie seventh in the table, four points off the top four positions and four places behind city rival Inter.
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