The term ‘vendor loan’ has appeared a lot recently in relation to the sale of AC Milan and the ongoing investigation into the club, and some clarification has arrived.
As Calcio e Finanza reports, the vendor loan is financing granted by Elliott Management to RedBird Capital as part of the operation that led to the latter purchasing the club from the former, as Gerry Cardinale explained.
That particular transaction is now precisely the subjected of the investigation by the Milan Prosecutor’s Office which sees Milan’s current CEO Giorgio Furlani and former CEO Ivan Gazidis under the microscope.
Regarding the vendor loan, new details emerge from the financial statements as of 30 June 2023 of Rossoneri Sport Investment Luxembourg, which is the vehicle used by Elliott to provide the financing to ACM Bidco, which in turn is the company used by RedBird as part of the operation that led to the purchase of Milan.
As stated in the document consulted by Calcio e Finanza, confirming what has already been reported by the lawyer Felice Raimondo, ‘as of 31 August 2022, the Company entered into a loan agreement with ACM BIDCO BV for an amount of EUR 560,000,000.00.
“The loan has an interest rate of 8% and expires on the third anniversary of the closing date. On October 21, 2022, the Company received an amount of EUR 10,000,000.00 as partial reimbursement.
“On January 27, 2023, pursuant to an assignment agreement with Project Redblack Sarl, the Company transferred 95.73% (equivalent to EUR 526,515,000.00) of its right and title to the financed loan to Project Redblack Sarl as payment in nature .”
The remaining 4.27% refers to the shares pertaining to Blue Skye, Elliott’s partner in the control chain of Milan from which several complaints about the sale of the club originated (11 cases across Italy, Luxembourg and USA), one of which led to the opening of the investigation. Claims against which Elliott responded with a private criminal indictment – called ‘citation directe’ – in Luxembourg.
With this action the US fund accused Blue Skye Financial Partners and its representatives of crimes including blackmail, extortion and fraudulent misrepresentation in support of its legal actions against the sale. As revealed in recent days by Calcio e Finanza, the conflict will reopen in the coming weeks with a hearing.
Returning to the vendor loan, another interesting aspect concerns the interest on the loan, which will not be due to Project Redblack before 30 June 2025.
“On July 26, 2023, the Company entered into an ‘AFA agreement’ with Project Redblack Sarl as lender, following the assessment of the “Assigned Interest”, for the purpose of rectifying certain sums repaid by the Company to Project Redblack Sarl under of the AFA, with effect from 27 January 2023.
“Project Redblack Sarl has confirmed pursuant to a letter […] dated 28 August 2023, that it will not require payment or reimbursement of any sums under the Financial Documents (as defined in the AFA) and the AFA Financial Documents (as defined in the AFA) by the Company before 30 June 2025, and which with effect from 6 March 2023, will not be payable or will accrue interest or default interest pursuant to the Financial Documents and the AFA Financial Documents.”
