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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 said 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 said 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, Italy’s top football league.
Oaktree is a $192bn investing powerhouse and one of the oldest specialists in chasing companies for unpaid debts. It made headlines in 2022 when it seized key properties in Hong Kong and mainland China from ailing property developer Evergrande.
People close to Oaktree said the firm was not obstructing the refinancing process, adding that the loan may well be repaid by next week’s deadline.
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. Suning’s founder Zhang Jindong subsequently installed his 32-year-old son Steven Zhang as president of Inter.
China’s President Xi Jinping had set out ambitious goals to turn the country into a football powerhouse but Beijing later curbed overseas investments in the sport. The clampdown forced several other Chinese owners to sell or slash their holdings.
Suning is among the Chinese conglomerates, including Evergrande and distressed debt investor China Huarong Asset Management, which were hit by the country’s property downturn and the pandemic, putting pressure on indebted groups that had used leverage to fuel expansion.
Oaktree, Pimco, Suning, Inter and Goldman all declined to comment. Raine was not immediately available to comment.
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