Milan: Yonghong says delays caused by Chinese authorities, but the deal will go ahead
The chairman of Chinese club SES speaks out: ‘We will pay the Super Cup prize money’
(ANSA) – MILAN, 22 DEC – Yonghong Li, Chairman of SES, had hoped to be on his way to Doha, where Milan will play the Italian Super Cup final against Juventus on Friday. But the famous ‘closing’ – a term fans have become familiar with in recent months – is taking longer than expected. “I’m sorry for the fans, who are understandably keen for the sale to be finalised,” he said in an interview with ANSA, “but ultimately it’s only right that this should be the case; this final was earned by the current management and it’s only fair that they should be the ones to experience it and, hopefully, win it. For our part, we have decided to make our contribution by accepting Milan’s proposal to offer a bonus in the event of victory, which would be a further incentive for SES to keep the bar high. Our ambition is, in fact, to continue Milan’s history of success. And we hope that Silvio Berlusconi, as Honorary President, will be able to lift more trophies in the future.”
D: What’s the current status? Why hasn’t the closing agreement been signed yet? What authorisations are still outstanding, and when will they be granted?
R: In China, any investment in foreign countries is subject to approval by the Chinese regulatory authority. Recently, the authority announced new control measures regarding overseas investments, and this also applies to transactions announced before the agreement was made public, as in the case of SES’s acquisition of AC Milan. The SES team is working through the authorisation process required under the new rules, but in general, all pending authorisation applications – not just ours – are subject to the same measures.
D: Why – whilst awaiting authorisation – was a stake in Milan equivalent to the €200 million paid in advance not acquired?
R: Because it would not have been authorised. The regulations restrict Chinese acquisitions of shareholdings abroad, regardless of their size. At this stage, SES is not permitted to hold any stake in Milan.
D: Why is it that many other Chinese groups have invested in the football industry, both in Italy and in the UK, without encountering the same difficulties?
R: These are transactions that were completed before the announcement of the new control measures
D: Can you confirm that all the funds required for the acquisition of the company have already been raised and are at the consortium’s disposal?
R: In fact, SES has raised more capital than the amount of the investment; the availability of these funds is subject to the completion of the procedure required by the regulator. SES is also committed to the ongoing review and optimisation of its investor base, in line with the new regulations set out by the Chinese authorities.
D: What would happen if the authorisations were refused?
R: SES has identified an alternative investment structure that would resolve the issue posed by the new measures introduced.
D: Is it true, then, that work is underway on a ‘Plan B’ involving European capital and investors? If so, how would that work? Would they be interim shareholders who would make way for the Chinese shareholders once the approvals have been granted? Would the timeline (3 March) change?
R: At this stage, we are confident that the authorisations will be granted in time to allow the transaction to be finalised by the date agreed with Fininvest; we would therefore prefer not to go into detail regarding Plan B, which, in any case, is fully compliant with the current regulatory framework.
D: In that case, would you remain a shareholder?
R: Personally, I am fully committed to building Milan’s future, and this has recently been confirmed by the payment of the second instalment to Fininvest.
D: Who paid the 100 million given as a deposit? Is the capital held by AC Milan’s future shareholders? Yes, the second instalment was paid directly by a company wholly owned by SES.
R: Is it true that SES will cover the losses incurred by Milan from July onwards? Yes, the agreements with Fininvest stipulate that the losses incurred by Milan since last July are to be borne by SES; this is one of the main reasons behind the requirement to share decisions involving expenditure on the part of Milan.
D: Is it feasible for the remaining 320 million to be paid in instalments? Perhaps through regular payments of 100 million?
R: This possibility is neither provided for in the agreement with Fininvest nor is it currently envisaged by the parties.
D: Why has the list of investors not yet been made public? Can you confirm the names of the investors reported by the press over the last few days?
R: Unfortunately, we will not be able to provide further information on this matter until the transaction is finalised, not least because such early disclosure could complicate the already delicate process of obtaining the authorisations required to complete the transaction. Furthermore, SES has entered into confidentiality agreements with many of the investors, and the commitment of some of them is conditional upon obtaining government approvals. For all these reasons, we are required to disclose the final shareholder structure no earlier than the closing. In any event, in accordance with the terms of the agreements, we have provided Fininvest with a confidential list of investors and are keeping it constantly updated on the progress of the approval process.
D: The consortium appears to consist of financial institutions that do not usually buy football clubs. Who are the real buyers of AC Milan?
R: We do not comment on rumours regarding the names of investors. In general, Chinese financial institutions actively support Chinese investment abroad, and it is worth noting that SES is an investment fund. All investors participating in the fund take economic fundamentals into account and assess the merits of the investment from all relevant perspectives.
D: SES is a holding company owned by several parties. How will the capital be distributed amongst the shareholders? What balance of governance will be required to ensure the team is managed effectively?
R: As mentioned, SES is a fund and, as such, is professionally managed by the management company. AC Milan’s board of directors will comprise investor representatives and independent members, with the sole aim of supporting the optimal management of AC Milan, in order to achieve the best possible results for both the investors and the team.
D: What is your professional track record? Have you had any involvement in managing companies in the sports industry? What expertise do you have in this area?
R: My expertise in the field of sport is not particularly significant. I would like to reiterate that the running of the club will be entrusted to the board of directors and the management team at Milan, who have been and will continue to be selected from amongst the best professionals in the industry.
D: Someone has suggested that SES’s capital actually belongs to Silvio Berlusconi.
R: This is a completely unfounded rumour. Money laundering is a criminal offence punishable by law in both Italy and China. The transaction involving AC Milan is being carried out using capital from Chinese investors (were this not the case, incidentally, we would not be facing all the authorisation issues that are currently holding us up) and is fully compliant with local and international laws. SES has the utmost respect for Silvio Berlusconi in his role as the counterparty to this transaction.
D: Let’s talk about the market. How will the market be managed in future from a financial perspective?
R: The January transfer window must result in a break-even position. This was the joint decision of Fininvest and SES
D: How will the market be managed in future from a governance perspective? Who will make the decisions?
R: Adriano Galliani will manage the transfer market in accordance with the terms of the agreement and, therefore, every transfer must be approved by SES.
D: Why isn’t the market managed entirely by Fininvest?
R: As I was saying, the costs of running the club will remain the responsibility of SES after the closing, and so we cannot fail to have a say on all matters relating to expenditure. Moreover, even setting aside this not insignificant aspect, any transaction carried out during the period between the signing of the preliminary agreement and the closing will, to all intents and purposes, affect the future owners of Milan, both in terms of future costs and in terms of strategy. It is standard practice in any acquisition for the contractual agreements to guarantee the buyer a degree of control over all transactions carried out by the seller between the signing of the contract and the closing.
