SportsBarcelona finalizes a loan of 500 million with Goldman Sachs and JP...

    Barcelona finalizes a loan of 500 million with Goldman Sachs and JP Morgan

    Barca closed with the Turkish construction company Limak a tight period of works to remodel the Camp Nou. His intention is for the first soccer team to be able to play there again in November 2024 and not extend his exile any longer at the Lluis Companys stadium in Montjuïc, where he will settle from next week. For this to be possible, the start of the dismantling works on the third tier of the stadium must not be delayed beyond next June. But first, the club must get 1,500 million euros to finance it, despite the fact that the stadium works will barely amount to 950 million. Next Friday is the last day to seal that agreement and the moment does not seem the most propitious for the entity: due to the reputational crisis suffered by the club due to the Negreira case and its inability in recent years to obtain benefits is added to the mistrust that hangs over financial markets after the fall of Silicon Valley Bank, a crisis that has spread to Europe (already affected by the war in Ukraine) through Credit Suisse and fears about the future of Deutsche Bank. It is difficult to get the money at a cost that the entity considers acceptable.

    The difficulty of finding investors at the moment has led to another change of plans at the club. The directive is now working on a global agreement for the same amount that it wanted before (1,500 million euros to gain air and cover all possible contingencies), but with a different starting point than initially planned. Bet on a loan of 500 million euros over five years with an interest rate that would be somewhat above 6% interest rate, sources from Barcelona report. The borrowers would be Goldman Sachs and JP Morgan (in not identical but not very different share ratios), the two investment banks initially signed up to seek resources in the US capital markets, more accustomed to investing in clubs and venues. sports. The rest of the economic needs would be achieved later and through debt issues. But that first tranche of 500 million in the short term will mean more cash flow for the club than initially expected.

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    In the negotiations, the return terms are also being discussed. The first 100 million euros that come from the Espai Barca will be kept by the club for its budget. The second 100 million will be used to pay the debt. The issue, however, is that the business plan contemplates annual income of 347 million euros thanks to the new facilities, a figure that would mean doubling the current ones.

    “The US market is closed and does not trust Europe,” says the owner of a Barcelona fund manager who constantly travels to the United States in search of funds interested in investing in Spanish projects. Its role is similar to that entrusted by Joan Laporta’s board to Goldman Sachs and JP Morgan, the two investment banks that were entrusted with the financial operation of the Espai Barca, the entire project to remodel the Camp Nou and its surroundings, and the raising the 1,500 million euros that are considered necessary to move it forward. The two entities are trying to attract the attention of American insurers. Neither the two investment banks nor Barca want to talk about the operation, which Kroll also remains silent about, the rating agency that was commissioned to rate the project (in order to sell to potential investors) and that for two weeks he has not been able to give any information because the club demanded that the information on his project be private.

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    In order to bring the negotiations to a successful conclusion, the main effort that the club is making is to explain the progress it is making to return to profits and put an end to operating losses that in the last three years have been around 200 million euros. euro. In this offensive, the reduction of the wage bill is key, exceeding 600 million euros and that the current board wants to put below 500 million euros. But the other dark cloud that is over the club, beyond the reputational risk, is the one that Justice is investigating for the payment of seven million euros to the former vice president of the Spanish referees, Jose Maria Enriquez Negreira, and that could even end in a downgrade.

    Since the assembly approved the 1,500 million for Espai Barca in 2021, the club has had to change plans on several occasions. When Goldman Sachs took over the management of the project, it proposed making three consecutive debt issues of 500 million euros, which would not be fully paid for at least until 2052. Two weeks ago, the plans already changed due to the difficulties of finding investors: a five-year loan of 200 million euros and five debt issues of between 100 and 400 million to be paid by 2047. Given this change in plans, Kroll decided to lower the rating of the operation from BBB+ to BBB, although it was still keeping it out of the speculative grade, which further penalizes debt operations and forces higher interest payments to be paid for each euro requested.

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    In the end, depending on the fact that Goldman Sachs and JP Morgan do not put more conditions that the club considers unaffordable, the last structuring wins: 500 million five-year debt and subsequent debt issues until completing the 1,500 million operation approved in assembly, which In no case can it exceed 35 years. As an alternative, as Cadena Ser announced yesterday, there is Key Capital, which would also be willing to finance the project.

    If the operation does not go ahead, the works of the Camp Nou will have to be put back in a drawer. The club considers that in no case will it have to compensate Limak, who is taking advantage of the Camp Nou and Barcelona macro-project to project his business to Latin America, because his contract was linked to finding the financing formula.

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    Source: EL PAIS

    This post is posted by Awutar staff members. Awutar is a global multimedia website. Our Email: [email protected]


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