Bridging loan used for takeover of Arsenal FC
There are many uses for bridging loans, but one of the more unusual ones is to finance the takeover of a football company.
Stan Kroenke is a majority shareholder in Arsenal football club with 66.7% of the shares. The other largest shareholder at 14.58% is Alisher Usmanov. Kroenke has offered £600 million cash for Usmanov’s shares, which values them at £29,420 each. Most of the funding for the deal is through a bridging loan by Deutsche Bank. This is a short-term loan that can make sure that the deal is completed quickly. If the takeover is successful, the loan could then be restructured to a more long-term finance.
Kroenke hopes to eventually have a 97% stake in Arsenal by buying shares from other shareholders.
This is not the first time that a large loan has been used to finance the takeover of a football club. In 2005, the Glazier family borrowed £525 million to buy Manchester United but controversially made the club responsible for the debt and interest payments. Arsenal fans have been assured that Kroenke’s takeover would not make Arsenal liable for any debts. They are anxious however due to the lack of transparency about Kroenke’s bid.
Many bridging loans are used for property-related deals, to purchase property and for renovations, whether domestic or commercial. In theory, they can be used for any purpose including buying sporting clubs. A borrower needs sufficient assets to act as security and a sound plan for when and how the loan will be repaid.