Reading FC’s sale has reportedly been blocked due to owner Dai Yongge’s £55 million debt to a Chinese state-backed bank.
The Royals’ future hangs in the balance due to owner Dai Yongge’s £55 million debt to Haitong International Securities, a Chinese investment bank. The debt, reportedly secured against the club’s Madejski Stadium, has caused complications in the sale of the club. Documents seen by The Guardian reveal that Dai’s undisclosed debt has become a major obstacle in the ongoing attempts to sell Reading.
A recent £30 million takeover bid by businessman Rob Couhig was blocked after the investment bank obtained a stop notice on the stadium, preventing its transfer to Couhig’s company, Redwood Holdings. This legal move by Haitong has raised concerns about the possibility of a sale, as no buyer would be willing to purchase Reading without control of its stadium.
Haitong’s Debt and the Impact on the Club
Haitong International Securities, which is merging with Guotai Junan Securities to become China’s largest bank, lent Dai approximately £44 million in 2018. The loan was due for repayment in July 2022, but as no payments were made, the debt has now swelled to over £55 million due to interest.
With the loan secured against the stadium, Haitong’s legal intervention through Hong Kong courts and the British Virgin Islands (BVI) has stopped any progress on the sale of Reading FC. According to reports, Haitong’s connections to the Chinese government and its growing impatience over the unpaid debt mean they are unlikely to compromise easily.
A source familiar with the sale process commented, “It’s not that Dai won’t sell, but he can’t sell. He put the stadium up as collateral against a £50 million loan, and the bank want their money back. And no one is going to buy Reading without the stadium.”
Dai Yongge’s failure to repay previously undisclosed £55m+ debts to a state-backed Chinese bank are preventing the sale of Reading FC as the loan is secured against the Select Car Leasing Stadium.
Haitong blocked the sale to Couhig by obtaining a stop notice in the British… pic.twitter.com/QqoKdAyiT7
— Talk Reading (@TalkReading) October 10, 2024
Potential Buyers and Ongoing Negotiations
Despite the setback, Reading FC announced they are in exclusive talks with another potential buyer. However, the unresolved debt and stadium issue remain significant hurdles. Should the loan remain unpaid at the point of sale, ownership of the stadium would automatically transfer to Haitong, leaving Reading in an untenable position without control of their home ground.
The English Football League (EFL) has not been informed of the new buyer’s identity, and there is growing scepticism surrounding the likelihood of a successful sale without resolving the debt situation. Negotiations between Dai Yongge and Haitong over repayment began earlier this year, with Dai offering assets, including the stadium, as part of the deal. Nonetheless, the Hong Kong courts issued a stop notice in February 2023 to prevent the stadium from being transferred before the loan is settled.
With the bank’s strong legal standing and Dai’s mounting debt, the potential sale of Reading FC remains in limbo. Haitong International’s desire to reclaim their funds complicates the club’s future, and it’s uncertain whether Dai can resolve the situation to facilitate a smooth sale.
Writer’s View
Reading FC’s current predicament underscores the challenges that football clubs face when financial mismanagement occurs at the ownership level. The debt secured against the club’s most valuable asset, its stadium, is a massive obstacle to the sale, as it leaves prospective buyers wary of the consequences. Dai Yongge’s inability to resolve the debt swiftly has placed the club in a precarious position, with its future now uncertain.
The club’s fans are left in limbo, hoping for a resolution that will see the club emerge from these financial troubles intact. However, with the legal complexities surrounding the loan and the bank’s determination to recoup their money, Reading’s road to a stable future appears far from straightforward.
