There is no turning back now. LaLiga and CVC have taken a key step in their alliance, baptized as LaLiga Impulso, and for which the fund will inject close to 2,000 million for the modernization of professional football clubs. CVC launched this Friday an issue of 850 million in bonds with which it seeks to finance the operation. The rest of the amount, 1,200 million, will be provided by the fund itself through an injection of equity. This, in addition, has signed a line of financing RCF with 40 million.

LaLiga Impulso has taken its first steps in recent months. One, the creation of the company LaLiga Group International, of which the fund has 8.2% of the capital. Another, the delivery of the first 633 million to the clubs adhering to the pact, 38 of the 42 that make up Spanish professional football. In addition, CVC will benefit each year from 8.2% of the competition’s television rights, the main remuneration it will receive for its investment.

This crystallized after the outbreak of Covid-19, which put the accounts of football clubs in check by suffering a sudden drop in their income. This made the queen competition of Spanish football explore agreements with large venture capital funds.

This is how the pact with CVC emerged last summer, which allowed the teams to be rescued with 1,900 million. In exchange, he obtains that 8.2% in LaLiga Group, under which all the commercial assets of the competition depend, except for television; and the right to receive an annual 8.2% of these for the next 50 years.

After the delivery of the first 633 million, CVC will deliver another 219.6 million in July and 112 more in July of this year, which will come from the funds obtained from the issue. The last two payments, of 482.4 million each, will be paid in June 2023 and June 2024.

The operation was rejected by three illustrious Spanish footballers: Real Madrid, FC Barcelona and Athletic Bilbao, who were joined by Ibiza. These teams have gone to court to try to stop the deal.

Despite the fact that everything depends on the final decision of the justice system, the agreement between Spanish football and the fund that Javier de Jaime pilots in the country is already a fact, since the broadcast implies that there is no going back. Goldman Sachs is in charge of coordinating the operation. Credit Suisse and Deutsche Bank are working on a second step.

The placement banks, together with LaLiga and CVC, will meet over the next few days, until Wednesday, with debt investors to acquire these bonds in a road show that started this Friday. Details of the operation, such as the price, will be decided at these appointments. The planned schedule is that the issue is made at the end of next week. What is definitive is that the debt will expire in 2029 and will have several windows for early repayment. It will also have a fixed and a variable section.

The rating agencies have also issued their opinion. In the case of Moody’s, its rating was Ba3, three steps below investment grade. The main strengths of the operation are the absence of competition, the stable nature of its income from television rights and the financial control of LaLiga. on club accounts. But he judges as the main weaknesses of the agreement precisely the division between the clubs due to the reception of the agreement; the Superliga project, sponsored by Real Madrid and Barcelona; and its dependency on Movistar, to whom the broadcasting rights have been awarded together with DAZN for five years. It also warns about the high indebtedness of Lorrane, the issuer of the bonds, of six times the profits, as well as the null margin to meet the maturity of the bonds with cash.

Fitch’s BB rating is one notch above Moody’s. The agency considers that the agreement between LaLiga and CVC has “multiple layers of protection” and “economic incentives” to isolate investors in these bonds in case the demand prospers, although it warns that this would mean an immediate downgrade of the rating . This agency also warns of the “weak” financing structure and the few covenants it contemplates.

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