Last weekend we reported that as part of the failure of a Chinese investor’s inability to make a €32 million debt owed to Paul Singer’s Elliott Management, the legendary investor and hedge fund billionaire was set to take control over the legendary Italian soccer club, AC Milan, whose debt infusion in the 2016 purchase of the Italian club by Li Yonghong, primed him for equity ownership in case of a default.
As a reminder, Paul Singer’s hedge fund played a key role in allowing Li to conclude the €740 million purchase of Italy’s most successful football club at the international level, which was sold by Silvio Berlusconi’s investment company Fininvest at just the right time in April 2017 top-ticking China’s M&A wave, by providing last-minute financing. Elliott then lent Li €303 million to complete the purchase “and provided a further €32 million to help the club resolve a dispute with soccer’s European governing body UEFA.”
This, of course, is the same Paul Singer who once seized an Argentinian frigate, the ARA Libertad, in 2012 as part of his long-running debt dispute with the recently insolvent Latin American nation (which then went on to troll bond investors by selling 100 year bonds just a few years later).
However, since running a football club is hardly the core specialty of the distressed investor, many were wondering if Singer would immediately flip the club to someone else, or if he would indeed keep it and try to turn it around. And if there is a club that needs turning around, it is AC Milan: ever since its acquisition last year by a largely unknown Chinese investors who was merely looking for a quick scheme to park some funds offshore, Milan’s troubles only grew and and on May 22, UEFA said that the team “breached financial fair-play rules because of uncertainties about the team’s effort to refinance the loan provided by Elliott.” Because of this, AC Milan was banned from European competition.
Meanwhile, the football team hired Bank of America to refinance the team’s debt and according to Bloomberg, in recent weeks the club has attracted investors willing to buy controlling stakes, though no deals were secured. Possible buyers included Italian-American media magnate Rocco Commisso and the Ricketts family, which owns the Chicago Cubs Major League Baseball team.
Surely there were more than enough willing buyers who would take the Rossoneri off Singer’s plate?
Then overnight we got the answer when, as Bloomberg reported, Elliott Management said it plans to hold onto AC Milan and run the Italian football club alone, at least until it’s back on solid footing, and perhaps indefinitely.
On Tuesday, the New York-based hedge fund said it had taken control of AC Milan and in a statement said that its goal was to “achieve long-term success for AC Milan by focusing on the fundamentals and ensuring the club is well-capitalized.”
Elliott won’t consider selling the club or bringing in a partner in the foreseeable future while it works on stabilizing AC Milan’s finances, the people said, asking not to be identified because the details are private. Elliott has said it intends to inject 50 million euros ($58.4 million) in equity to stabilize the club and will add further capital over time to fund the transformation.
Elliott said one of its goals is “returning the club to the pantheon of top European football clubs where it rightly belongs.”
We for one are hoping that Elliott is successful in turning around the club that brought us such legends as van Basten, Gullit, Kaka, Pirlo, Costacurta, Rivera, Baresi and Maldini.
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