Birmingham International Holdings Ltd. (2309), owner of English soccer team Birmingham City, plans to issue HK$190.1 million ($24.5 million) of bonds to Chairman Carson Yeung in a deal to remove the club’s debt owed to him.
The company will assume the obligations of the 15.2 million-pound ($24 million) debt that the soccer club has to Yeung, according to a filing to Hong Kong’s stock exchange yesterday. It will then pay Yeung by issuing him two-year zero-coupon convertible bonds. The company also plans to sell HK$300 million of additional convertible bonds and 1.26 billion new shares to help it repay debt.
The deal with Yeung is aimed at making Birmingham City more attractive to potential buyers of a minority stake in the team by shifting debt to the company, Birmingham International said in the filing. A Hong Kong judge yesterday rejected a second attempt by Yeung to have his money-laundering trial tossed out.
“Against the backdrop of Mr. Yeung’s ongoing court case in Hong Kong, it has come to the attention of the board that some potential buyers’ interest” in Birmingham City Plc and BCFC “are deterred by the financial links between BCFC and Mr. Yeung,” Birmingham International said in the statement.
The company, which holds a 96.6 percent stake in Birmingham City Plc, owner of the club, said in February that it had been approached by a sports management company representing a group of investors interested in buying the team. Birmingham City was relegated from the elite Premier League in May 2011, a month before Yeung, its largest shareholder, was arrested in Hong Kong on five counts of money laundering. Yeung has pleaded not guilty to the charges.
Birmingham International will sell HK$50 million of zero-coupon convertible bonds to a company owned by Yung Yue Zhou, a former director who resigned last year, according to yesterday’s filing. Yung will buy a further HK$250 million of convertibles in two equal batches.
The company will sell 1.26 billion new shares at 5 Hong Kong cents each to multiple investors, raising a net HK$62 million to repay debt and for use as working capital.
Birmingham International said in September that it expects to record a “significant” net loss for the year ended June 30. The company has delayed publication of the annual earnings to no later than Nov. 15.
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