ACMi­lan buyer to seek more in­vestors to raise funds to close $830m deal

China Daily (USA) - - BUSINESS - By BLOOMBERG

The Chi­nese con­sor­tium at­tempt­ing to buy the ACMi­lan soc­cer team has been hunt­ing for more in­vestors since it agreed on a deal with Sil­vio Ber­lus­coni’s Fin­in­vest SpA, peo­ple with knowl­edge of the mat­ter said.

The lit­tle-known buyer group, led by busi­ness­man Li Yonghong, is sound­ing out in­ter­est from new in­vestors, the peo­ple said. The con­sor­tium didn’t have all the fi­nanc­ing in place when it agreed last month to pur­chase AC Mi­lan for 740 mil­lion eu­ros ($830 mil­lion) in­clud­ing debt, ac­cord­ing to the peo­ple, who asked not to be iden­ti­fied be­cause the dis­cus­sions are con­fi­den­tial. A state­ment

Li’s group will also con­sider build­ing a new sta­dium as part of its ex­pan­sion plans, ac­cord­ing to two of the peo­ple. The con­sor­tium has been telling po­ten­tial part­ners they could earn out­sized re­turns if AC Mi­lan even­tu­ally lists on a Chi­nese stock ex­change, where com­pa­nies trade at a premium to Western mar­kets, the peo­ple said.

The Chi­nese con­sor­tium, known as Sino-Europe Sports, is seek­ing money from new part­ners to help meet its stated goal of com­plet­ing the deal by year-end. The late-stage fundrais­ing at­tempt high­lights the dilemma faced by Western com­pa­nies’ boards that must weigh the al­lure of higher prices of­fered by Chi­nese suit­ors with the com­pli­ca­tions that can arise if fi­nanc­ing isn’t all in place.

“Sino-Europe Sports is in the fi­nal stage of the ac­qui­si­tion and has been pro­vid­ing project in­for­ma­tion to ex­ist­ing fi­nanc­ing part­ners and other in­ter­ested par­ties as a partof the clos­ing process, which will be com­pleted at the end of this year,” it said in an e-mailed state­ment. “The ac­qui­si­tion of the funds will be also fully in place at the same time.”

A rep­re­sen­ta­tive de­clined to com­ment.

The Chi­nese con­sor­tium for Fin­in­vest has al­ready paid a non-re­fund­able de­posit of 100 mil­lion eu­ros in two tranches, Fin­in­vest said last week. The pur­chase agree­ment also in­cludes a re­quire­ment to pro­vide an­other 350 mil­lion eu­ros of fund­ing to ACMi­lan over a three-year pe­riod.

Haixia Cap­i­talMan­age­ment Co, an in­vest­ment firm con­trolled by State De­vel­op­ment & In­vest­ment Corp, is join­ing Li in the pur­chase, ac­cord­ing to the Au­gust deal an­nounce­ment, which didn’t name any other com­pa­nies. Fin­in­vest said at the time that the Chi­nese buyer group also in­cludes “com­pa­nies ac­tive in the fi­nan­cial in­dus­try and oth­ers in in­dus­trial sec­tors”.

In an ear­lier draft of the fundrais­ing ma­te­ri­als, the Chi­nese in­vestor group in­di­cated the team’s value could mul­ti­ply sev­eral times in the long term to reach 2.9 bil­lion eu­ros, ri­val­ing top clubs like Real Madrid and Manch­ester United Plc, ac­cord­ing to doc­u­ments ob­tained by Bloomberg. The ac­quirer pre­dicted its plan to re­vive the sto­ried team would help an­nual rev­enue more than dou­ble to 500 mil­lion eu­ros in five years. It plans toopenuptheChi­nese mar­ket with li­cens­ing and en­dorse­ment deals, the doc­u­ments show.

AC Mi­lan has strug­gled in re­cent years, with the team a shadow of the squad that once reg­u­larly com­peted for soc­cer’s top prizes.

Sino-Europe Sports is in the fi­nal stage of the ac­qui­si­tion ... as a part of the clos­ing process, which will be com­pleted at the end of this year.” from the Chi­nese con­sor­tium led by busi­ness­man Li Yonghong

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