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AC Milan’s Chinese buyer apparently provided false bank report during talks

HONG KONG — 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, said a statement from the lender, whose name appears on the documents.

Not so fast: The Chinese company seeking to buy the AC Milan football team (seen here in red and black) may have given a false bank report. Photo: Reuters

Not so fast: The Chinese company seeking to buy the AC Milan football team (seen here in red and black) may have given a false bank report. Photo: Reuters

HONG KONG — 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, said 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 (S$1,12 billion), including debt. To prove their financial strength during the deal talks, the Chinese group provided documents on what appears to be Bank of Jiangsu stationery, purporting to show transaction details of aconsortium member’s corporate account, said people with knowledge of the matter, who asked 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 on Tuesday (Sept 20).

The Chinese consortium, led by businessman Mr 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 4.14pm on April 25 and lists recent account activity ending with a balance of 852,468,304.56 yuan (S$174.46 million) on that day. It is stamped with a red oval seal bearing the Bank of Jiangsu name.

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 continued to work to finalise 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 in two tranches, Fininvest said on Sept 7. Fininvest said in a statement on 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 US$169 billion (S$230.77 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 have struggled, at times, to secure the financing needed to close transactions.

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. 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 of funding to AC Milan over a three-year period.

Mr 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. BLOOMBERG

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