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Argentina's River Plate Approves Debt Sale to Buy Players

Argentina's River Plate Is Said to Sell Debt to Buy Players

(Bloomberg) -- Argentina’s debt bonanza is reaching fever pitch as River Plate, one of the country’s most celebrated soccer clubs, prepares to issue $20 million to buy players.

The club’s executive board agreed on Thursday to the creation of a trust that will use income from contracts to pay investors a U.S. dollar-denominated coupon for 3 1/2 years, it said in a statement. The board approved the plan by a 17-to-2 vote.

The sale’s proceeds will be used to buy players at a time when River Plate is floundering in 19th place in Argentina’s Primera Division, and looks unlikely to qualify directly for next year’s Libertadores Cup, South America’s equivalent of Europe’s Champions League. Soccer clubs are increasingly turning to capital markets for funding, with Inter Milan selling 300 million euros ($373 million) of bonds to refinance debt last year.

“Given the local macroeconomic context and the high percentage of foreign currency income we believe that it’s best for the club to be covered in a hard currency like the dollar, with a lower interest rate and without exposure to the exchange rate,” the club said in the statement. “This will mean that our capital is better protected.”

‘Los Millonarios’

The debt’s annual interest will be capped at 9 percent and the trustee for the public offering will be Banco de Valores SA, according to two people with knowledge of the plan, who asked not to be identified discussing a private matter.

The Buenos Aires-based club, which is known as the “Los Millonarios” or the millionaires, will pledge income in dollars as backing for repayment of the debt as it seeks to escape its financial woes, the people said. The trust was designed by bankers Jorge Pablo Brito and Juan Napoli, who are officials at the club, the people said.

Representatives from River Plate, the second-biggest Argentine club by number of fans, and Banco de Valores didn’t reply to calls seeking further comments.

Argentina’s biggest club, Boca Juniors, also raised cash in the late 1990s when President Mauricio Macri was at the helm. Argentine issuers will look to sell more than $30 billion in bonds locally and internationally during 2018, according to Itau Unibanco Holding SA’s Argentina unit.

To contact the reporters on this story: Pablo Gonzalez in Buenos Aires at pgonzalez49@bloomberg.net, Charlie Devereux in Buenos Aires at cdevereux3@bloomberg.net.

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Sally Bakewell, Kenneth Pringle

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