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Guochuan Lai tells West Brom he can't settle £4.1m debt because of Chinese government restrictions

Owner Guochuan Lai has told the Baggies restrictions into foreign investment from the Chinese government are stopping him repaying the £4.1million debt he owes the club.

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Guochuan Lai. (AMA)

Chief executive Mark Jenkins has formally asked Lai for the money he owes Albion owing to an historic loan he inherited from former owner Jeremy Peace.

In response, Lai acknowledged the debt, but said he could not repay it at the moment because of government restrictions specifically on sports related investments.

Albion’s Chinese owner inherited the debt from Peace in the 2016 takeover, and it has remained on club accounts ever since.

The debt, which was originally worth £3.7m, is accruing interest at a rate that is favourable to the club, of around five per cent.

Jenkins can borrow money from the bank at a cheaper interest rate if necessary, meaning repayment is not desperate.

However, following relegation from the Premier League and failure to win promotion at the first attempt, money is getting tighter at The Hawthorns.

Jenkins subsequently wrote to Lai to ask what he intends to do about the debt, but the owner claims restrictions from his native China is currently stopping him from repaying the money.

There is no suggestion of any tension between the chief executive and the owner.

Club accounts state there is ‘no fixed date for repayment’ and the loan is ‘payable on demand’.

Lai is responsible for the debt because his company, Yunyi Guokai Sports Development Limited, owns West Bromwich Albion Holdings Ltd.

That holding company owes the money to West Bromwich Albion Football Club Ltd due to a loan between the two accounts taken out by former owner Peace in September 2014.

Lai bought an 88 per cent majority stake in Albion from Peace in 2016 for a staggering £200m during a record year of Chinese investment overseas.

But a year later, the Chinese government clamped down on overseas investment in sport and entertainment industries.

When Lai bought the club he said he wanted it to remain ‘self-sustaining’, and the only investment he has made since is a £6m purchase of Chinese striker Zhang Yuning.

That transfer in 2017 was made shortly before the crackdown, and the Baggies have subsequently sold Yuning to Beijing Guoan, recouping their money.