Thursday, September 01, 2011

Plans by Birmingham International (02309.HK:)- owner of the English football team Birmingham City - to borrow HK$80 million from mainland businessman Yang Yuezhou show the company is desperate for cash.
The two-year loan has a high 12 percent interest rate and, curiously, its announcement came on the day Yang was appointed deputy chairman.

Very few details are known about Yang, other than he's a developer who heads Qinghai China Hui Industrial.

Birmingham will use the loan to repay debts and as general working capital. Earlier this year, it reported its liabilities exceeded assets by about HK$348 million.

Its shares have been suspended since June 30 when its chairman, tycoon Carson Yeung Ka-sing, was charged with money laundering. Yeung was given permission by the courts on Tuesday to travel to England on team business.

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The relegation of the team from the Premiership last season has also been costly as it adds to the difficulties of generating a sustainable cash flow.