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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