Roma players celebrate a goal scored by Aleksandar Kolarov during the Serie A match between ACF ... [+]
Expectations that AS Roma are about to be sold for at least $840 million to a group led by U.S. billionaire Dan Friedkin has driven up the price of the Italian soccer team’s bonds.
Over $300 million of convertible bonds were issued last August via a private placement to institutional investors primarily to repay more expensive debt. The all-time high for the bonds of $118.33 was reached a week ago, the same price the bonds closed yesterday. That represents more than a 5% increase in just four months. Throw in the 5.125% yield and bondholders have done quite well.
True, Roma’s shareholders have done even better—the stock price is up about one-third since the convertible bonds were offered. But if the sale of the team falls through, bondholders will still reap the nice 5.125% coupon while there’s no dividend for shareholders.
Two days ago, Roma issued a statement about the sale of the team saying in part, “...no definitive agreements concerning a transfer of NEEP ROMA HOLDING S.p.A and its subsidiaries have been formalised to date and that any potential transaction with The Friedkin Group remains subject to a successful completion of a legal due diligence upon the AS Roma Group.”
The increase in the bond price comes in the face of worsening financial results for the team. According to an analysis by Swiss Ramble in November, Roma’s revenue before player sales fell to $264 million for the 2019-18 fiscal year versus $283 million the previous year. Operating income (in the sense of earnings before interest, taxes, depreciation and amortization) was a negative $32 million in 2019-18 compared with $13 million the prior year. And net debt inched up to $247 million.
In June we valued Roma at $622 million, in large part due to concerns over the team’s new stadium. Roma currently play in Stadio Olimpico, which it shares with rival SS Lazio. A new stadium and the additional revenue it might mean for the team could greatly enhance the value of Roma, which is what it appears Friedkin is betting on.
Meanwhile, Roma’s bondholders are enjoying the ride.
2020-01-01 12:41:55Z
https://www.forbes.com/sites/mikeozanian/2020/01/01/as-romas-bondholders-score-on-anticipation-of-soccer-teams-sale/
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