Friday December 22 2017
Milan refinancing 50-50?

The Financial Times reports that Milan have just a 50-50 chance of refinancing their debt to Elliott Management.

The U.S. hedge fund provided around €300m to allow Yonghong Li to compete his takeover in April, with €128m owed by the club at seven per cent interest and €180m by the Chinese businessman at around 11 per cent interest.

If these debts aren’t repaid by October, the club can be taken over by Elliott, which was one of the reasons given by UEFA for rejecting a voluntary agreement on Financial Fair Play.

As a result, the Rossoneri are looking to refinance the debt to give them more time to pay, and are working with Highbridge to find a lender.

CEO Marco Fassone has stated that he’s confident a deal will be agreed by the spring, but the Financial Times says “a person close to the deal” has told them the chances of an agreement are only 50-50.

The newspaper notes that asset managers have typically been reluctant to lend to football clubs, as cash flows can vary wildly based on performances on the pitch.

It’s thought that uncertainty over the personal wealth of Li is putting off potential lenders, with the New York Times reporting last month that his mining empire is in fact owned by others.

Inter also issued bonds to refinance debts earlier this month, but the FT notes the band was “in demand, pricing at 4.875 per cent yield and trading up in the secondary market”.

The club itself noted it had received “around double the required subscriptions” on the bonds, which will yield 4.875 per cent in 2022.

Investors were reassured by the structuring of the bonds, which specifies debts must be serviced before any money can be spent on the club.

Nonetheless, the Nerazzurri’s bond will provide the club with an €82m cash injection.

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