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MILAN, May 12 (Reuters) - U.S. private equity fund Elliott has a potential right to take over Italian soccer club AC Milan if loans it gave to the club's new Chinese owners go into default, according to a source and the club's unpublished 2016 accounts.
The accounts, reviewed by Reuters, show the owners have pledged their newly acquired shares in AC Milan and the club's assets to a vehicle called Project Redblack. The shares held in Project Redblack are in turn pledged to Elliott in the event of default, a source familiar with the matter said.
Elliott threw the new owners, a consortium led by Chinese businessman Li Yonghong, a 300 million euro ($328 million) lifeline in March, just as the 740 million euro purchase looked to be in trouble.
Elliott extended the loans to the group's Luxembourg-based purchase vehicle, Rossoneri Sport Investment Lux.
Neither Elliott nor Li has disclosed the terms, though a second source familiar with them said the loans were due in 18 months and carried an average interest rate of just under 10 percent.
The Chinese bought AC Milan from Italian former prime minister Silvio Berlusconi who was unwilling to stump up the extra funds required for the team to compete with Europe's top clubs, many now bankrolled by wealthy Gulf and Asian owners.
AC Milan's accounts show that in the event of default on the loans, Project Redblack can take all of the new owners' shares as well as the club's cash accounts and receivables, brands and other intellectual property, and film and pictures archives.
The accounts reflect the financial performance of AC Milan in its final year under the ownership of Berlusconi's holding company, Fininvest, and shows a loss of 74.9 million euros.
An AC Milan spokesperson declined to comment, saying only that any comments on the 2016 accounts would be made at the club's shareholder meeting on May 18.
$1 = 0.9156 euros Editing by Mark Bendeich and David Evans