The latest from Semafor…
777 Partners, the sports investor whose finances are under scrutiny as it tries to pull off its biggest deal yet, the purchase of Premier League’s Everton, is scrambling to sell businesses it owns to raise cash and reassure regulators.
The firm has been unable to produce audited financial statements and is facing a cash crunch in several of its businesses. In recent weeks, it has tried to restructure a €100 million Italian tax bill, seen airplanes at a budget carrier it owns seized by creditors, and failed to fund employees’ pension contributions at a London professional basketball team it owns, according to people familiar with the matter.
777 has been shopping its mortgage business, a pile of legal settlement claims, and Boeing aircraft owned by a Canadian budget carrier it operates, according to people familiar with the matter and presentations viewed by Semafor.
The effort will also help disentangle 777’s captive insurance company, which has bankrolled many of its investments. Authorities in Bermuda have warned the insurer that it’s too heavily invested in 777’s deals, people familiar with the matter said. Those financial ties also sparked a downgrade last month from a credit-rating agency, which cited “governance and risk management practices.”
777 agreed to sell some of those investments, according to the agency, AM Best, and appears to be doing that now.
For sale: an Ohio-based company that recruits potential beneficiaries of legal settlements, which 777 told possible buyers has $250 million coming its way from cases against Blue Cross Blue Shield, chicken antitrust, and an Indian drugmaker accused of delaying the release of generic drugs, documents show. The firm is also trying to sell a mortgage business, which has been heavily financed by 777’s captive insurer, according to documents shown to potential acquirers.
“With a portfolio featuring more than 60 businesses, evaluating businesses for sale is a regular part of the private investment model,” a 777 spokesman said. “We regularly entertain offers for various assets and strategically refinance debt to achieve more favorable terms.”
Investors I’ve talked to who have looked at these businesses for sale say they’re pretty good. There’s an active market for litigation finance and for nonbank mortgage lending. It looks like 777, in an effort to raise cash and get some breathing room from regulators and ratings agencies, is starting with their best assets, or at least those that are easiest to sell.
A private jet belonging to 777’s managing partner, Josh Wander, has been sitting in a Pennsylvania hangar since September due to unpaid bills, European soccer site Josimar reports.
Read Semafor’s past coverage of 777’s finances, including how it has used its insurance arm and a scoop on a related Justice Department probe.
