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Valencia Close to Bankruptcy

  • AFP, Thursday, March 14, 2013 5:45 PM

La Liga's Valencia could be in serious financial trouble, as a Spanish court nullified a guarantee made by the Valencia regional government over a loan given to the soccer club by troubled Spanish bank Bankia.

The original loan of $97.7 million, which has now grown to $112 million with interest payments, was taken out on behalf of the Valencia Foundation in 2009 so that it could buy shares in the club to keep it from defaulting on its debts. However, Spain’s Court of Administrative Dispute has now found that the local government finance arm, which guaranteed the loan, was acting against the interest of members of the Valencia Foundation by diminishing their interest in the club.

The local government had already paid $6.3 million at the beginning of the year to cover a payment that the foundation failed to meet. Now that the local government can no longer help Valencia repay its debt, Bankia could effectively become its owner. The next payment is due at the end of August.

Read the whole story at AFP »

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