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Inter owners in race to refinance loan

The Chinese owner of Inter Milan is racing to refinance an almost €400mn loan by next week, as Pimco and Oaktree Capital battle for influence over the future of the newly crowned Italian football champions. Chinese retailer Suning Holdings, which has owned a majority stake in Inter Milan since 2016, needs to refinance a loan by Monday from Oaktree, one of the world’s biggest distressed debt investors.

Suning is attempting to refinance the loan with US bond giant Pimco at an interest rate in the high teens. But the talks are being complicated by Oaktree, according to several people involved. Oaktree provided a €275mn emergency bridge loan in 2021 to Suning, secured against the retailer’s stake in Inter. This allowed its owners to inject more capital into the club, whose finances had been ravaged by the pandemic.

The amount outstanding has since ballooned to about €395mn, due to the loan’s annual interest rate of more than 12 per cent. Oaktree anticipated that Suning would sell the club and structured its loan in such a way that it would share in the profits from a successful sale.

People involved in the negotiations say Oaktree’s desire to protect the value of this equity option has become a sticking point in the refinancing, and the Los Angeles-based group has grown frustrated with the slow progress on achieving a sale. One person involved told the Financial Times Oaktree was concerned that allowing Suning to raise further debt with a third party could reduce the chances of a sale and diminish any potential proceeds it might receive.

A person close to Oaktree told the Pink ‘Un that the firm had “been very supportive and haven’t made things difficult for [Suning] but there was always the expectation that there’d be a sale of the club”. Suning has been working with advisers at Raine and Goldman Sachs for about two years to find a buyer for Inter. Next week’s deadline underlines the contrast between the club’s finances and its success on the pitch, which culminated last month when it beat arch-rival AC Milan to become champions of Serie A.

Oaktree has no intention of seizing control of the club, according to people familiar with the matter. That is in contrast to activist hedge fund Elliott Management, which seized control of AC Milan in 2018 after its Chinese owner failed to make a payment on a high-interest loan from Paul Singer’s hedge fund. Suning acquired Inter at a time when Chinese investors were pouring money into European football clubs, but Chinese government encouragement went into reverse.

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