CHANGXING, China/MILAN (Reuters) - The paper trail for an $800 million bid by little-known Chinese investors for AC Milan, the seven-time European soccer champions, leads via Luxembourg, Hong Kong and a network of shell companies to the deserted 11th floor of the World Trade Centre in Changxing, two hours west of Shanghai.
The storied club announced the sale last August and it was expected to close by the end of last year.
But the bidding group - identified by Milan's owners as Sino-Europe Sports Investment Management Changxing Co Ltd - has pushed back the payment of cash instalments and is negotiating a further delay in closing the deal, two people close to the matter have told Reuters.
The acquisition, announced at the height of China's $3 billion European soccer splurge, has become something of a lightning rod for Beijing's crackdown on overseas vanity deals as it tries to check capital outflows amid a weaker yuan currency.
It also highlights the often obscure and complex network of investors and shell companies behind some Chinese overseas bids - an attraction for those maybe seeking a quiet way to move money abroad, but a potential risk for others involved.
The bidders have paid 200 million euros ($215.7 million) in three tranches to Milan's owner Fininvest, the family company of Italian media tycoon and former prime minister Silvio Berlusconi. They are due to pay an outstanding 320 million euros and are expected to inject a further 100 million euros into the team.
A likely new deadline for payment is April 7.
The agreement values AC Milan at 740 million euros ($788 million) including 220 million euros of debt.
As pressure from Beijing increases on foreign exchange acquisitions, key investors are pulling back, say those close to the matter.
AC Milan announced the sale with no public signing or press conference, just a few hand-out photographs. The club named only two individual investors - Li Yonghong and Han Li - along with state-linked Haixia Capital and other undisclosed "state-controlled entities".
It's unclear how many of those remain.
China Construction Bank (CCB), one of the highest-profile known backers, had pledged to invest around 150 million euros, but backed out of the consortium last month, one of the sources said, prompting the group to ask for more time to pay.
Haixia Capital, which is owned by arms of the provincial Fujian government, State Development and Investment Corp (SDIC) and Taiwanese conglomerate Fubon Group, is still on board, but only in a financing role, the person said.
Among the direct investors, only Li Yonghong remains, the person added. Li is not well known in China or in soccer.
China-based sources at CCB said that recent tighter capital controls would impact the investment, but they were not aware of how the deal would be finalised.
CCB, Haixia Capital and Fubon declined to comment. A spokeswoman for SDIC said she wasn't aware of the deal, and noted that Haixia Capital makes its own investment decisions.
Reuters could not reach the Fujian government for comment. Neither Li nor Han could be contacted.
Berlusconi's son, Pier Silvio, said last week he had no direct information on the deal, but noted that if something were to go wrong there would be no financial damage for Fininvest, as "a step backwards by the buyers would leave something concrete in our hands" - referring to the Chinese payments already made.
The head of China's foreign exchange regulator this week became the latest high-profile official to point the finger at overseas deals, including soccer, suggesting some were simply a way to ghost funds out of the country. He gave no specifics.
"If these purchases help improve the standard of Chinese football, then I think that's a good thing," said Pan Gongsheng, head of the State Administration of Foreign Exchange. "But is that what's really happening? A lot of Chinese companies already have high levels of debt and then borrow another large sum to make overseas purchases. Others pretend to be investing, but are actually just moving their assets."
Italy's football association, the FIGC, says inclusion in its premier soccer league requires solid finances and transparency, with buyers having to disclose financial and banking qualifications within a month of purchase.
The investment vehicle Sino-Europe Sports holds together a web of firms with names like Rossoneri Sport and Sino-Europe Milan. Most are also linked to Chen Huashan, the listed legal representative.
Reuters could not independently reach Chen.
The use of shell companies in deals is not unusual. But soccer dealmakers and lawyers said the complex consortium put the deal at greater risk as Beijing goes cold on mega deals.
Charles Wang, a London-based sports lawyer at Mishcon de Reya, said the opaque structure of such deals could increase the risks overseas, though the anonymity it provides is a lure for some investors in China.
Trying to predict whether these deals go through, though, is hard, he said. "There are so many driving forces, known or unknown, behind lots of outbound investments made from China, not only in football, but in other areas where we see active Chinese investors."
A Reuters visit to the Changxing World Trade Centre found that the offices of eight of the shell companies connected to the bid and registered there did not exist.
Guards and office workers said they had heard of Sino-Europe Sports, but had rarely, if ever, seen any employees.
"I've heard about the firm," said Liu Cong, an analyst who works on the same floor. "But no one ever comes here."
($1 = 0.9271 euros)
Reporting by Adam Jourdan in CHANGXING, Elvira Pollina in MILAN and Michelle Price in HONG KONG, with additional reporting by Guilia Segreti in MILAN, Faith Hung in TAIPEI, Robert-Jan Bartunek in BRUSSELS and SHANGHAI newsroom; Editing by Clara Ferreira-Marques and Ian Geoghegan