AC Milan’s Chinese Buyer Said to Show False Bank Letter in Talks

AC Milan Buyer Said to Use False Bank Letter
  • Chinese group said to give letter showing funding capability
  • Bank of Jiangsu says it hasn’t issued any such document

The Chinese investor group seeking funds to buy AC Milan, the soccer club owned by former Italian premier Silvio Berlusconi, provided a false bank report during its initial deal negotiations, according to a statement from the lender whose name appears on the documents.

Berlusconi’s Fininvest SpA agreed last month to sell the team to a group of little-known Chinese investors for 740 million euros ($825 million), including debt. To prove their financial strength during the deal talks, the Chinese group provided documents on what appears to be Bank of Jiangsu Co. stationery, purporting to show transaction details of a consortium member’s corporate account, people with knowledge of the matter said, asking not to be identified as the information is private.

After reviewing the matter, Bank of Jiangsu found it hadn’t issued any such document detailing the account’s transactions, the lender said in an e-mailed response to Bloomberg queries Tuesday. The Chinese consortium, led by businessman Li Yonghong and known as Sino-Europe Sports Investment Management Changxing Co., “does not confirm it has ever sent such a document,” it said in an e-mailed statement, declining to be more specific. “As we have already factually demonstrated, we stay committed on the closing of the deal.” 

One of the purported bank reports says it was printed at 4:14 p.m. on April 25 and lists recent account activity ending with a balance of 852,468,304.56 yuan ($128 million) on that day. It is stamped with a red oval seal bearing the Bank of Jiangsu name. 

Ambitious Buyers

The documents were sent to Fininvest as part of a collection of paperwork during the initial deal negotiations with the Chinese group, according to the people. Sellers typically demand to see a potential acquirer’s source of funds before allowing the suitor to proceed with due diligence. The final contract signed with Fininvest didn’t end up making reference to the many bank letters it received during the yearlong talks, the people said.

Fininvest checked the soundness of the buyers through contacts with Chinese financial institutions, and it continues to work to finalize the deal by the end of the year, according to one of the people. The Chinese consortium has already paid a non-refundable deposit of 100 million euros in two tranches, Fininvest said Sept. 7. Fininvest said in a statement Tuesday it “does not confirm having received the specific documentation under discussion and has no intention to comment on it.” 

Increasingly ambitious Chinese companies have announced a record $169 billion of overseas purchases this year as they shift their focus from acquiring basic commodities to purchasing marquee entertainment and sports brands. Though Chinese buyers looking to cater to the nation’s increasingly affluent consumers have won deals by offering top-dollar prices, they’ve struggled at times to secure the financing needed to close transactions.

Seeking Financing

The Chinese consortium didn’t have all the financing in place when it agreed to purchase the Italian club, people familiar with the matter said last week. The group is seeking money from new partners to help meet its stated goal of completing the deal by year-end. 

The purchase agreement also includes a requirement to provide another 350 million euros of funding to AC Milan over a three-year period.

Li’s group would consider building a new stadium as part of its expansion plans, people with knowledge of the matter said as recently as last week. The consortium has been telling potential partners they could earn outsized returns if AC Milan eventually lists on a Chinese stock exchange, where companies trade at a premium to Western markets, according to those people.

— With assistance by Daniele Lepido, Tommaso Ebhardt, Jun Luo, and Jonathan Browning

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