Inter Milan, a well-known Italian football club, is now under the management of Oaktree Capital Management after the club’s Chinese owners, Suning Holding Group, couldn’t repay a €395 million loan. The majority stake in Inter Milan, used as collateral for the debt, is now owned by the US-based fund. Alejandro Cano, Oaktree’s managing director and co-head of Europe for Oaktree’s global opportunities strategy, stated their prime concern is the club’s operational and financial consistency.
Having emerged as the champions of Italy’s leading Serie A league this season and being the runners-up in the 2020 Uefa Champions League, Inter Milan’s new owners are purportedly planning to diversify their board with a heavier Italian and European influence. This move comes as no surprise as Oaktree, a well-known asset manager valued at $192 billion that specialises in distressed debt investing, has history with football clubs, having previously acquired and later sold its stake in Stade Malherbe Caen, a struggling French club. Also, Swansea City counts Oaktree co-founder, Steve Kaplan, as one of its investors.
Inter Milan isn’t, however, the first football club in Milan to have its creditors take over. Back in 2018, AC Milan’s debt was turned into club equity by Elliott Management after the club’s initial owner failed to stay on top of its obligations. Prior to this change of guard, Suning was in discussions with Pimco to refinance the club’s debt but was unable to reach an agreement before the due date of the Oaktree loan.
It’s worth noting that Suning’s acquisition of Inter Milan in 2016 was a significant step in Chinese stakeholder involvement in European football clubs, a move encouraged by the Chinese government in their effort to revolutionise football domestically. However, they have since faced difficulties, losing positions at clubs like Aston Villa and Atletico Madrid due to financial issues.
Oaktree was of crucial support during the pandemic, lending money to Suning in 2021 to bolster Inter Milan’s finances as the Covid-19 safety guidelines kept the stadiums empty. According to the agreement signed, if Suning defaulted on the loan, Oaktree or any representatives acting for them could immediately enforce the pledge given by Suning and take possession of the collateral.
Post the acquisition of Inter by Oaktree, the football club maintains several lingering financial obligations, inclusive of bonds valued at €415 million that were marketed to institutional investors and are due for maturity in early 2027. These bonds were issued by Inter Media and Communication, an entity owning the club’s broadcasting and sponsorship rights. The revenue generated from these rights first services the debts owed to bondholders, subsequently flowing into the wider group.
On Wednesday, data from Bloomberg showed that Inter Media’s notes, with a return rate of 6.75 per cent and due in 2027, remained relatively stable, trading approximately 98.6 cents on the euro. – Bloomberg