(Bloomberg) -- A company linked to the Chinese businessman who led the buyout of AC Milan in 2017 is being sued over unpaid debts by a group of investment firms.
Five claims have been filed against British Virgin Islands-based Rossoneri Advance Co. Ltd. involving a combined $187 million in debt due and owed, according to court documents dated July 4. The five plaintiffs are suing for debt, damages, accrued interest and other claims.
Rossoneri Advance is an offshore company which spearheaded the 2017 purchase of the club, according to filings in Hong Kong and Luxembourg reviewed by Bloomberg News. AC Milan has since changed ownership.
An exchange filing disclosed by a Hong Kong-listed company in 2019 described Rossoneri Advance as the ultimate holding company of Rossoneri Sport Investment Co. Ltd., wholly owned by Li Yonghong, the Chinese businessman behind the deal.
Rossoneri Sport Investment Co. Ltd. was in turn indicated as an affiliate of Luxembourg-based Rossoneri Sport Investment Luxembourg Sarl, which at one time held a majority stake in AC Milan, according to Luxembourg filings.
The AC Milan acquisition came during the peak of Chinese interest in football, as firms went on a frenzy of building their own teams or taking over European clubs.
But the deal raised alarm bells, and the actual identity of the group of little-known Chinese investors who bought the storied club — and the source of their funding — drew questions. The Hong Kong lawsuits could offer clarity.
Cayman Lenders
The plaintiffs are Long Teng Zhi Zhong Industry Investment Fund, Shen Zhou Long Yuan Industry Investment Fund Limited, Sheng Rong Stable Investment Fund Limited, Zhi Hua Stable Investment Fund Limited and Zhi Hua Cheng Rong Industry Investment Fund, according to the Hong Kong court filings. All five are mutual funds based in the Cayman Islands, according to an official list from the local monetary authority.
In writs of summons, the five funds pointed to a bond subscription agreement dated February 2017, two months before Li and other investors concluded their purchase of the club. The writs didn’t provide details about the use of proceeds of the bond, or whether the lending was connected to the acquisition.
There was no reply to an email from Bloomberg to a director listed for Rossoneri Sport Investment Co. Ltd. A spokesperson for AC Milan declined to comment.
The €740 million ($802 million) takeover of AC Milan from Silvio Berlusconi’s Fininvest SpA was cemented after Li and his associates paid €370 million, Bloomberg reported at the time. The Rossoneri group payments included €190 million from Li; the rest was borrowed from Elliott Management Corp for closing, according to a report at the time.
The Chinese investors later lost control of the club after failing to repay debt owed to the US fund. Elliott sold AC Milan in 2022 to RedBird Capital Partners, the team’s current owner.
AC Milan, which has won 19 Italian and seven European championships, posted record revenue of €405 million for the 2022-2023 season, nearly double the level of five seasons earlier, according to public filings.
--With assistance from Daniele Lepido.
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