AC Milan owner fails to repay Elliott Management

Italian club close to being taken over by hedge fund that financed original deal

AC Milan, one of European football’s most successful clubs, is close to being taken over by the Elliott Management, after its Chinese owner failed to repay debt owed to the US-based hedge fund.

Li Yonghong, who acquired the Italian club last year, has failed to make a €32m payment which was due to paid to Elliott this week, according to people close to AC Milan’s leadership.

The Chinese entrepreneur acquired the club for €740m from Silvio Berlusconi, the media mogul and former Italian prime minister last year. But Mr Li also required high-interest loans worth more than €300m from the hedge fund founded by billionaire Paul Singer in order to fund the acquisition.

Mr Li appears not have paid the latest instalment due on the debt, putting Elliott in position to take full control of the club as soon as Monday, according to people with knowledge of the situation.

These people added that Elliott’s intentions for the club remain unclear, with reports suggesting that Mr Li is still seeking a buyer or new funding.

Elliott and representatives for AC Milan and its owner did not immediately respond to request for comment.

The club’s leadership has been in turmoil through the course of last season.

World Cup 2018

Hopes that revenues at AC Milan could be boosted through on-pitch performance were dashed by its failure to qualify for next season’s Champions League, the continent’s lucrative and prestigious club tournament, which it has won seven times in the past.

In May, Uefa, European football’s governing body, banned AC Milan from participating in any European competition, saying it had breached its so-called Financial Fair Play rules due to issues around spending on players and concerns about the club’s attempts to refinance its loans.

“I hope that this is the darkest hour of AC Milan, we can consider it at the end,” said Carlo Pellegatti, a Milan-based football writer whose family have been small shareholders in the club for decades.

“There are too many mysteries, too many invisible things about the Chinese owner. It is not possible to always continue to wait for the money.”

Limited information around Mr Li’s wealth has proved a barrier to AC Milan’s efforts to refinance its debt, according to people close to its recent dealings.

The New York Times has reported that corporate records show that, on paper, someone else owns his mining empire — though the has argued his control of the mining interests had been verified by lawyers and banks. Mr Li could not be reached for comment.