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Inter Milan facing Oaktree debt deadline

China’s Suning Holdings could be on the verge of losing control of Italian Serie A giants FC Internazionale Milan with the deadline to repay close to €400m in debt to Oaktree Capital Management looming large, according to a report by Bloomberg.

The debt is due for repayment on 20 May but payment could be made as late as Tuesday 21 May, following Monday’s bank holiday in Luxembourg, where Suning’s holding companies — which took out the debt — are based.

After that deadline has passed, Oaktree has the right to take control of Inter by claiming the collateral pledged in the 2021 financing deal – Suning’s majority stake in the club.

Oaktree could yet agree a short-term extension of the loan at a higher interest rate, giving Suning more time to sell the club, which has just claimed its 20th Serie A title, and use the proceeds to repay the California-based asset manager.

Oaktree makes opportunistic investments through its credit, private equity, real assets and equities strategies, extending credit lines to companies which may not have access to traditional funding sources.

In the case of the original €275m loaned to Suning’s Grand Tower holding company, the 12% coupon came with a payment-in-kind option, meaning it could be repaid with cash or with additional debt, with Suning opting for the latter option, meaning it now owes close to €400m.

According to data and analytics platform Football Benchmark, Inter’s valuation last year was between €1.2bn and €1.3bn.

If Oaktree does take control of Inter, it will be following in the footsteps of Elliott Management. The latter firm took over Inter’s city rivals AC Milan in 2018, swapping debt for equity in the club after the previous owner defaulted on its liabilities.

 

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