Birmingham City Owners Borrow Money from New Deputy Chairman

English soccer club Birmingham City owners, Birmingham International Holdings Ltd plans to borrow as much as $10.3 million from its newly appointed deputy chairman.

The Hong Kong-based company entered into a two-year loan agreement with Yang Yue Zhou, who was appointed executive director and deputy chairman yesterday, according to a statement to the Hong Kong stock exchange.

Birmingham shares have been suspended since June 30 when Chairman Carson Yeung was charged with money laundering in a Hong Kong court. Earlier this year, the company said its liabilities exceeded assets by about HK$348 million. Birmingham City was relegated from England’s Premier division last season, three months after winning the League Cup, its first major trophy in 48 years.

Castor Pang, Hong Kong-based head of research at Core-Pacific Yamaichi International Ltd, said: “The loan is borrowed at a very high interest rate and it clearly shows that Birmingham is short of cash. The company has difficulties generating sustainable cash flow, especially after the football club’s relegation.”

Proceeds from the loan will be used for the repayment of debt and as general working capital, the company said in today’s statement. Birmingham International generated 95 percent of its HK$375.4 million in revenue from its football operations in the six months ended Dec. 31, 2010, according to the company.