TL'd:
The RedBird era at Milan has now begun and the Via Aldo Rossi club is about to greet a new step in its history. After the signing of the definitive agreement for the acquisition by RedBird of the Rossoneri club (the so-called
signing ) between the US company of Gerald "Gerry" Cardinale and the Elliott fund, the transfer to the new ownership will take place during the summer, with the
closing expected by September 2022 and an evaluation of Milan in the transaction equal to 1.2 billion.
How will the operation that will bring the Rossoneri club into RedBird's hands be structured? According to what was learned by Calcio e Finanza from financial sources,
Cardinale's US company will not receive funding from banks to complete the acquisition (JpMorgan, together with Bank of America Merrill Lynch, acted only as Elliott's advisor for the transaction. ).
Instead, according to what has been learned, there
will be a vendor loan , that is a loan granted by the seller (in this case the fund led by Paul Singer) to the buyer, or RedBird. This is a not uncommon practice in the world of finance in the operations of company acquisitions. And in the specific case,
the funding should be between 200 and 300 million euros. In essence, therefore, it would be more than anything else a form of
delayed payment granted by Elliott regarding a part of the agreed amount for the purchase of the club.
Another important detail is also
the interest rate at which this
vendor loan will be granted. According to what has been learned, it should be equal to
about 6/7%. A level of cost of money that falls within the dynamics of the market: think for example of financial transactions linked to other Italian football clubs, such as in the case of Merda, whose bond is now trading at a rate of around 9%. It is therefore normal for a company that is in a better debt-financial position, therefore to have a lower credit risk and that this premium can be substantiated in a discount equal to about 2-300 basis points (i.e. 2-3%) .
Furthermore, a sort of bonus for the Elliott fund (less than 6%) is also foreseen within the operation in the event that RedBird were to resell Milan at a higher price than what the club was paid today: a percentage on the resale that Elliott will then be able to collect but only in the event that the amount of the new sale is higher than the valuation of 1.2 billion in the Elliott-RedBird deal.
We still at 0 external debts baybeee.
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