Milan, bond refund: in-depth analysis by Milanisti 1899

MILAN, BOND REFUND – “Today, A.C. Milan S.p.A. (the “Company”) exercised, with a communication sent to the sole owner of the bonds called “Guaranteed Bonded Loan Association Calcio Milan S.p.A. 2017 – 2018 – Series 1 “(ISIN Code IT005254435) (the” Series 1 Bonds “) and” Guaranteed Bond Loan Association Football Milan S.p.A. 2017 – 2019 – Series 2 “(ISIN Code IT0005254443) (the” Series 2 Bonds “and, together with the Series 1 Bonds, the” Bonds “) issued by the Company and listed on the Vienna Stock Exchange Third Market, as well as to the agent of calculation and payments, the voluntary full repayment option of the Bonds pursuant to art. 9.2 of the respective regulations of the Bonds.

The repayment date of the Bonds is set at 28 September 2018. ”


With this statement, AC Milan said it had fully repaid the two bonds listed on the third market in Vienna. But to understand well what really happened it is necessary to take a step back: in April 2017 Mr. Li’s Milan contracted with Elliott Management a loan for a total debt of about 308M, of which 180M to be borne by the owner (Mr. Li ), loan required to complete the purchase of the club.

And another 128M for the club, with the issue of two bonds fully underwritten by Elliott:


– a 73M bond to cover direct bank debt

– a 55M bond covering the first tranches of the summer market operations

It is good to further specify the following:

– AC Milan as at 31.12.2016 had a net financial position (hereinafter PFN) consisting of 110M of factoring debts (bank advances from future receivables, such as TV rights or commercial contracts) and 70M of direct financial indebtedness. Therefore, net of the balance of the market operations (which at the time recorded a -26M) the NFP of Milan was about 180M.

– AC Milan at 30.06.2017 had an NFP consisting of 73M of financing (first bond issued by Elliott which covered direct bank debt), 10M of shareholder debt and 68M of factoring for a total of about 150M net of market balance. Attention: as you can see the bank advances have fallen by about 40M, which simply means that Milan at that time no longer used factoring to manage the company, but accessed other sources of credit: capital increases, turnover and bonds issued by Elliott.


– AC Milan at 31.12.2017 had a PFN of 165M. We discovered this by reading the half-yearly published by the company, which then provides us with a perfect assist to obtain another data: in fact the company in the following months to 30.06.17 also charged the second 55M bond (the one used for the market) ) thus bringing the financial exposure to 128M.

So if we subtract 128M from 165M, we get 36M which represents the maximum amount that Milan at the time could have for factoring debts (always net of market transactions). At this point it is necessary to make a further reflection: it is reasonable to imagine that the company from 31.12.17 to 30.06.18 has continued to use other forms of access to credit, in fact until the final summer crack, Mr. Li has always paid capital increases . So – although I cannot know for sure – it is likely to imagine that Fassone did not use bank advances, which consequently also after 30.06.18, given that a quarter of the new year has already passed, today, could have fallen to around 30M .

This means that AC Milan in the 2018/2019 financial statements (the current one, which will be approved in October 2019) could have an NFP in which only factoring debts will result, therefore the residual of those 36M. The other financial debts, however, will no longer be present because with the capital increase carried out in recent days, Elliott has transformed into capital the credit it had towards the club, or those 128M related to the two bonds. So it has transformed into value what until recently was a slope first towards third parties and then – after the enforcement – to members.

As regards relations with UEFA, the 2018/2019 financial statements are in line with the provisions of art. 62, paragraph 4, of the FPF ediz. 2015 and 2018. On the basis of the aforementioned regulation, financial indebtedness net of liquid assets, with the addition of the balance between trade payables receivables and payables, must not exceed net sales (sum between TV / commercial revenues / tenders / other revenues).

Well, from the reading of the financial statements to June 30, 17, which also includes the advances of expenses incurred after the end of the year, it is possible to deduce that AC Milan at 30.06.2018 has a balance between credits and debts from transfers of about 130 / 140M.

This sum derives from the incoming and outgoing operations carried out in the first Chinese summer, ie 126.5M at 30.06.17 and another 52.9 from 1 July ’17 onwards, discounted by the first tranches of installments equal to about 30% of the total. The latter should not be changed after the recent purchase campaign, as (as we have already specified in another study) Leonardo was very skilled in carrying out a shopping campaign practically at almost no cost. But we also assume that our DS has worsened this balance of 10 / 20M.

Therefore, said that Milan at 30.06.19 should have a negative market balance of -140 / 160M (unless it is heavily invested in January), this figure added to the probable -30M relating to factoring debts in the financial statements 18 / 19, would bring the net financial debt, for the purposes of the FPF, then with the addition of the market balance, to about 170 / 190M.

This sum, however, is much lower than the turnover that the company expects to get already this year (therefore in the budget 17/18) and that estimates from the same club should increase by 20M, then go from the current 236M to 256M that , net of capital gains (from the last six months to 36M), net sales amount to approximately 220M. Therefore 50M more than the net financial debt for the purposes of the FPF. Ultimately: UEFA exam passed.

Precisely for this reason, ie having a PFN Milan practically close to zero and being able to count on a margin of about 60M compared to net sales, well above the financial debt including the transfer market, it is reasonable to assume that UEFA carefully evaluates the opportunity to be able to grant Milan a “chat” with the Investigative Chamber, just as it was just done with the PSG that was sent back under investigation by the Chamber of Justice (which preferred to deepen the situation of the Paris club).

Of course it is that Milan will have to be sanctioned, but even the VA is: it simply represents the lighter sanction but, above all, more suitable in light of the club’s current financial situation. If not, then if an SA is applied to Milan or simply similar sanctions, UEFA would lose a unique opportunity to apply an institution that until now has only been a dead letter.


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