RedBird and Elliot suspended between the Netherlands and a 600 million loan – Corriere.it

Gerald Cardinale’s Redbird Capital Partners completed the acquisition of AC Milan from Paul Singer’s Elliott group on August 31 for 1.2 billion. But there are still gray areas on the operation. Let’s take stock.

The three stages

In the records of the Rossoneri club there are two official press releases and the assembly of 14 September. On June 1st, RedBird and Elliott declared that they had signed a definitive agreement for the sale; a month and a half ago RedBird claimed to have completed the acquisition; finally, on 14 September, the meeting that marks the entry of the RedBird representatives into the board of directors of AC Milan. And it was there at the meeting that the new direct shareholder of the club officially presented itself for the first time: the Dutch financial company Acm Bidco bv which should be the last link in a chain that climbs up to FootballCo Intermediate Cooperatief and reaches RedBird and Gerry Cardinale . There is therefore no doubt that the agreement is closed.

The questions

But what are the economic details? If Elliott has held a stake, as expected, which link in the chain is he in? And where the minority stake in AC Milan (August 31st release) of the New York Yankees, indicated with great emphasis as a partner? Are there collateral agreements between the shareholders on governance and shares (put and call options)? Because there is total silence on a pillar of the transaction such as the vendor loan? Does it amount to 600 million euros as per unconfirmed indiscretions or denials? Under what conditions did Elliot disburse the loan to RedBird? Paul Singer through Luxembourgish Rossoneri Sport Investment has 99% of AC Milan as a pledge: to what extent does the loan agreement affect Cardinale’s strategies and in which CSA can Singer enforce the guarantee? Are there qualified majorities in the Milan corporate system?

How much Cardinal commands

It is important to understand who is in charge but not secondary to know how much the new owner is in charge, especially in a coexistence regime. Perhaps information will soon arrive but in the meantime this is not known. So much so that some observers (even in the Uefa headquarters where the light on Lille-Elliott relations remains on) wonder if a partnership more than a sale has not been made with RedBird (which controls Toulouse). That is, if there is no form of joint control that takes place, for example, when the resolutions necessarily require the approval of the minority shareholder on fundamental matters (by statute or by shareholders’ agreement). Classic speculation that does not come out of nowhere. To feed it, on the one hand, the scarcity of information, and on the other the substantial continuity of the club’s structure (which, on the other hand, have brought great results) with 5 directors of the Elliott management still in office (president and CEO included) and 4 indicated by RedBird. For AC Milan president Paolo Scaroni, who has been on the board since Yonghong Li, this choice of continuity guarantees the value generated in recent years and a balanced approach in the transition. In fact, even the managing director, Ivan Gazidis, key man in the management, has just been reconfirmed although only until 5 December. So RedBird buys Milan by borrowing, according to rumors, 600 million at 7% from Elliott (the vendor loan dei Percassi to Stephen Pagliuca, Atalanta buyer, at 5%), giving Singer the majority of the club as a pledge and leaving him for now 5 out of 9 directors. of the operation.

The information with the dropper

Let’s go back to RedBird’s announcement of August 31 (curiously in 34 lines Elliott never mentioned) and imagine if Andrea Agnelli one day published a similar one: Tizio Capital Partners announced today that it has completed the acquisition of Juventus for a total of billions of euros. . And stop, nothing else on the terms of the operation. Three seconds later the telephone would ring and Consob would demand immediate communications to the market on: 1) Financial terms of the contract 2) Corporate structure of the transaction; 3) Times and methods of the transfer of ownership. 4) Any shareholder agreements, etc. Of course, Juve is listed on the stock exchange and has more stringent disclosure obligations with related criminal responsibilities (the Turin prosecutor in fact accuses the bianconeri of false communications to the market as well as of false accounting). But from 0 to 10 there are also intermediate levels of transparency: Milan is not a negligible reality in the Lombard hinterland that arouses interest only at the bar in the country. Whoever buys it knows it well.

Inter, the Nerazzurri unknowns

Clarity on the set-up is not a prerogative of Milanese football: in the Nerazzurri home, for example, there are many unknowns about the real grip of the Zhang on Inter, hunted as they are by the China Construction Bank, not just any banquet but one of the big four of Beijing under the direct leadership of the Party, to which they must return 250 million for an executive sentence of a judge. They then had to pledge the family holding companies in Luxembourg and Hong Kong and the entire scaffolding of Inter kept afloat by the 290 million lent at a high price (12% rate, maturity May 2024) by the Oaktree fund while they came to the club lack of income from the sponsor Digitalbits (80 million in 4 years). Among other things, Steven Zhang’s offshore company (the Great Matrix of the British Virgin Islands) appears that could be (or have been) liquidity reservoirs outside China but in fact every euro or yuan that passes around the young president of Inter can be prey to the Construction Bank, even a possible income from the sale of Inter. And this complicates everything. In the ranking of the financial statements, AC Milan is far ahead of its cousins: the 2021/2022 financial year marks a loss of 66.5 million (reduced by 30 million on the previous year) against the -140 million of Inter, which also significantly improved the red from 245.6 million the previous year. The revenues of Milan are close to 300 million (+ 14%), those of Inter are equal to 440 million (compared to 365 previously). On the pitch, things are going pretty well for both clubs: Milan travel better in the league, Inter is closer to qualifying for the knockout stages of the Champions League.