Photographer: Marco Luzzani/Getty Images

Berlusconi's Strange and Confusing AC Milan Sale Finally Closes

  • The U.S. hedge fund loaned 303 million euros to Li Yonghong
  • Former ENI, Telecom Italia CEOs to join soccer club’s board

Silvio Berlusconi finally managed to sell his soccer team AC Milan, Italy’s most successful club at the international level.

After an eight-month delay, Berlusconi’s investment company Fininvest SpA concluded a 740 million-euro ($788 million) deal with Chinese investors, according to a statement Thursday. Billionaire Paul Singer’s hedge fund manager Elliott Advisors UK Ltd agreed to provide 303 million euros of financing, according to people familiar with the matter. Berlusconi had owned AC Milan since 1986.

Rossoneri Sport Investment Lux, headed by Chinese businessman Li Yonghong, completed the purchase of the seven-time European champion with payments totaling 370 million euros on Thursday, according to the people, who asked not to be named discussing the details.

With the sale, Berlusconi parts ways with a team that’s burnished the former Italian premier’s standing yet lost money while the 80-year-old magnate battles Vivendi SA over the future of his media empire. Li plans to list AC Milan shares on the Hong Kong stock exchange, possibly in the next two to three years, the people said.

“Thanks to everybody again,” Berlusconi posted on his Facebook page with a handwritten signature. “After 30 years I’m leaving the ownership and chairmanship of AC Milan. I do it with pain and emotion but with the knowledge that modern soccer, to compete at the highest levels in Europe and the world, requires investments and resources that a single family isn’t any longer able to sustain.”

The Rossoneri group payments included 190 million euros from Li and 180 million euros borrowed from Elliott for closing. That covered the remainder due of 270 million euros, plus a 90 million-euro reimbursement to Berlusconi’s Fininvest SpA for money it’s injected into the team since the deal was signed in August. The buyers also replaced 10 million euros in cash held at the team. Li had made deposits totaling 250 million euros in several payments over the last eight months to buy time as he sought funds to complete the deal.

Capital Infusion

The buyers plan to invest capital into AC Milan aimed at increasing the team’s liquidity and strengthening the team’s financial structure, according to the statement.

Former Inter Milan director Marco Fassone will be appointed as AC Milan’s new chief executive officer, replacing longtime Berlusconi aide Adriano Galliani. Paolo Scaroni, former CEO of energy company ENI SpA, and Marco Patuano, ex-CEO of phone carrier Telecom Italia SpA, will be appointed to the team’s board on Friday, the people said.

Last month, the original group of Chinese investors lost the backing of its state-owned partner, Haixia Capital Management Co., forcing Li to find a way to finalize the acquisition, which includes 220 million euros in debt. Singer’s fund agreed to provide the loan, which in addition to the 180 million euros for closing included 73 million euros for the expense reimbursements and 50 million euros targeted for the summer transfer market, according to the people.

Chinese Buyers

Li, who will become chairman of the soccer club, had to use his personal wealth to help complete the deal and also pledged the team as a guarantee to secure financing from Elliott, according to the people. With the closing he paid a 90 million-euro refund to cover money Berlusconi’s Fininvest SpA injected into AC Milan since the preliminary deal was signed last summer.

The AC Milan deal is one of the most high-profile soccer team acquisitions by Chinese investors. A unit of Chinese retail group Suning Holdings Group Co. acquired about 70 percent of the city’s other Serie A team, Inter Milan, for 270 million euros in June 2016. Chinese businesses also have made investments in England’s Premier League. Lander Sports Development Co. agreed to buy a stake in Southampton in January.

The sale of AC Milan, which plays its crosstown rival on Saturday, has been troublesome. The original investment group has changed several times, and in September Bloomberg News reported it filed a false bank report during negotiations with Berlusconi’s company. Li denied the allegations.

The deal, originally scheduled to be completed in December, also was delayed because the investment group lacked authorization to export funds from China. Regulators in China have been ramping up their scrutiny of outbound investments, with a particular focus on sports and entertainment.

Vivendi Stand-Off

Berlusconi has been adding to his stake in broadcaster Mediaset Spa to fend off an unwanted advance from Vincent Bollore, the French billionaire who leads Vivendi as chairman. Vivendi now owns almost 30 percent of Mediaset, while Berlusconi’s Fininvest has about 41 percent, according to Bloomberg data.

Vivendi is likely to face a rebuke from Italian regulator Agcom for buying stakes in Mediaset and Telecom Italia, people familiar with the matter said this month. Bollore, who is trying to create a southern European media and telecommunications champion, pulled out of an agreement to buy Mediaset’s Premium pay-TV channel in a share-swap last year, and has been fighting with Berlusconi in court ever since.

Rossoneri Sport Investment was advised by financial advisers from Rothschild & Co. and by the law firms Gianni, Origoni, Grippo, Cappelli & Partners and Gattai, Minoli, Agostinelli & Partners. Fininvest was advised by Lazard and Studio Chiomenti.

— With assistance by Tariq Panja, and Jonathan Browning

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