Debt-ridden English football club Birmingham City, owned by embattled Hong Kong tycoon Carson Yeung, is planning to borrow more than $10 million from its newly appointed deputy chairman.
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Birmingham City (02309.HK)owner Carson YeungBirmingham International Holdings, the club's parent company, said in a statement to the Hong Kong stock exchange late Wednesday that Yang Yue Zhou has agreed to lend up to HK$80 million ($10.3 million) to the club.
Yang, a 41-year-old property developer who was announced as Birmingham's deputy chairman on the same day, will lend the money through a two-year agreement with a 12 percent interest rate.
The Hong Kong-listed firm, which has been suspended from trading since June when Yeung was charged with money-laundering, said the loan will be used for "repayment of debts and general working capital".
The loan agreement came a day after 51-year-old Yeung was granted permission by a Hong Kong court to travel to Britain in September to attend to his duties at the football club, after his cash bail was doubled to HK$8 million.
Yeung, a one-time hairdresser-turned-football tycoon, faces five counts of "dealing with property known or believed to represent proceeds of an indictable offence", but the exact nature of the allegations remain unclear.
Prosecutors have said investigations revealed around HK$720 million passed through accounts connected with the tycoon.
Yeung, who was little known prior to his emergence in English football, took control of the club in October 2009 in an £81 million ($130 million) takeover from David Sullivan and David Gold, now the co-owners of West Ham.
The club's fortunes however have gone downhill following the relegation of the Blues from the Premiership last season, three months after winning the League Cup, amid financial troubles at its parent company.
The firm disclosed in March that it has debts amounting to HK$348 million. It raised HK$49 million through a new share issue in May in Hong Kong, which reduced Yeung's stake from 24.9% to 23.3%.
Yeung has assured Birmingham City that he will continue to provide financial support for the club despite his criminal charges.