Elliott Management have dictated a specific condition to Investcorp before they will sign the documents to hand the club over, a report claims.
Today’s edition of Corriere dello Sport (via PianetaMilan) talks about the latest news from the takeover situation and how the hypothetical closure of Friday 29 April – just two weeks after the start of the exclusive negotiation period – was unrealistic.
A €1.18bn acquisition is complex and requires many steps which is why Investcorp continue to take the time available to study Milan’s costs and revenues, projecting their growth expectations and designing competitive strategies for the future.
This also acts as a way to form an idea on the price, negotiate terms and methods of payment, essentially build the entire financial structure of the operation, while it must be remembered that specific clauses can also be discussed for days.
On the structure of the operation, the hypothesis of bond issue by Investcorp emerged and this is a key point in the acquisition of the club, because that means the money will show up as debt against the club (to bond holders).
This does not mean that wealthy investors are not entering the Milan takeover operation and many acquisitions involve debt in the first phase, with a bridge loan from the banks, or the so-called ‘mezzanine debt’.
The buyer usually repays these very expensive loans very early, as soon as the financial structure of the transaction settles down. The paper adds that Elliott have placed a specific condition in the negotiation with Investcorp: whoever buys Milan must be an equity buyer – i.e. a buyer who invests his own capital, without injecting the debt used for the acquisition of the club.
This is out of respect for the club and not to ruin the work that they have done so far, while Elliott do not want to simply earn their profit and leave the club without caring for the consequences.