The global turbulence behind Bonza’s backers

The problems at 777 Partners, which also has a $21.7 million shareholding in soccer team Melbourne Victory, are not limited to Bonza. (Bonza is a major sponsor of Melbourne Victory. The football club last year lost $7.6 million.)

Questions, too, have been raised about the health of the operations of 777 Partners, which was founded in 2015 by US financiers Josh Wander and Steve Pasko.

The Miami-based private investment firm invests in seven sectors, including sports, aviation and insurance. It has stakes in football clubs such as Italy’s Genoa and the Spanish team Sevilla, British basketball teams, a Canadian low-cost carrier, Flair, and a Bermuda-based reinsurance entity, 777 Re.

It has also gained a lot of attention recently with its protracted negotiations to buy English Premier League club Everton. In the past eight months, it has sought extensions to that deal as scrutiny has grown about its ability to raise the funds to complete it.

Attention has also been growing following a number of media reports that have questioned 777 Partners’ financial outlook.

In January, The Guardian reported that 777 Partners was being pursued for $US30 million ($46 million) in unpaid aircraft leasing fees and damages in the UK, relating to four planes leased to Flair Airlines, which is part-owned by 777. In 2023, four aircraft leased by Flair Airlines were reportedly repossessed due to outstanding fees.

In response to that lawsuit, 777 Partners vehemently denied the allegations, describing them as “frivolous”.

On its website, 777 Partners states it had orders for 214 Boeing 737-MAX planes. This would be an enormous financial outlay, given the sticker price for a single aircraft is $US100 million.

In February, 777 Re, the reinsurance entity of 777 Partners that offers reinsurance on life insurance and annuity business, had its rating downgraded to C-, or weak, signalling concerns about its financial stability and risk management practices.

One of the reasons cited for the downgrade was 777 Re’s “diminished ability to write new business while simultaneously planning to address existing liabilities”.

Loading

It was the second time in several months that the ratings agency AM Best had downgraded 777 Re’s outlook. It had earlier warned about the company’s exposure to various 777 Partners investments.

In other words, funds from the insurer had been used to bankroll a number of 777 Partners investments. “These concerns are heightened by uncertainty regarding the financial condition of 777 Partners LLC as it has not provided audited financial statements for the past two years,” AM Best wrote.

The problems at 777 Partners have been compounded by one of its backers, a US life insurer called A-Cap, founded by Kenneth King.

King has steered hundreds of millions of dollars into 777 Partners through reinsurance contracts and loans. Now, as A-Cap tries to cut its exposure and get control of some of 777 Partners’ assets, it has set in place a domino effect that has resulted in the aircraft repossessions that have left Bonza and its passengers stranded.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.