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Rome - Hedge fund Elliott will take control of Italian football giants AC Milan this week after the club's Chinese owners failed to make a loan repayment to the American firm, sources close to the matter confirmed to AFP on Tuesday.
Elliott will take the reins of the seven-time European champions after owner Li Yonghong missed a Friday deadline to repay €32 million lent by Elliott to finance the final instalment of two capital increases worth a total of €120 million.
The source told AFP that Elliott began the legal process of taking control of Milan on Monday, and that a board meeting will be held on Thursday in which the date and agenda of a shareholder's meeting will be confirmed.
A new board will then be nominated at the shareholder's meeting, which will be held no sooner than eight days after the board summit.
With Elliott set to take over Li's majority stake, the Chinese directors currently on the Milan board will be replaced, most likely with representatives from the hedge fund.
Elliott helped Li's investment vehicle Rossoneri Sport Investment Luxembourg to complete the long-winded €740 million purchase of Milan from former Italian prime minister Silvio Berlusconi's investment firm Fininvest in April last year.
The fund lent Li just over €300 million at high interest rates - reportedly as much as 11 percent.
The deal was originally due to close at the end of 2016, but was delayed partly because the group couldn't export funds from China, as the country tightened control on money invested abroad.
However, the sale was also shadowed by questions over the source of Li's wealth. In October The New York Times claimed that "virtually nobody" in China had ever heard of him.
Italian media reported that Li had been trying to line up investors willing to take control of the club, with media magnate Rocco Commisso and the Ricketts family, which owns the Chicago Cubs baseball team, mooted as possible buyers.
However, no deal emerged.
The source told AFP that it is unclear what Elliott will do once in possession of the club.
Italian daily Corriere Dello Sport reported Tuesday that Elliott intends to maintain Milan among its assets rather than to quickly sell the club on.
It also reports that club legend Paolo Maldini could figure among the club's new management team, which would include former director Umberto Gandini returning to Milan as CEO after two seasons in the same role at fellow Serie A club AS Roma.
The changes at the top come as the club faces a ban from next season's Europa League for failing to respect the break-even requirement in European football governing body Uefa's Financial Fair Play (FFP) rules.
FFP regulations say that any football club in Europe spending more than its generated revenue could face sanctions.
Milan splashed out over €200 million on players last summer but finished sixth in Serie A and failed to qualify for the more lucrative Champions League.
In a statement from May 22, Uefa expressed doubts at Milan's ability to refinance loans (from Elliott) due to be repaid in October.
Milan are appealing Uefa's decision at the Court of Arbitration for Sport (CAS), which is expected to announce a final ruling on July 19.
