Suning can only remain Inter’s owners if they find €250 million in the coming weeks, according to an Italian football finance expert.
Reports in today’s papers said Steven Zhang would reiterate their commitment to the Nerazzurri in a board meeting on Tuesday, albeit Suning remain on the hunt for fresh investment.
Speaking to Calciomercato.it last night, Il Sole 24 Ore reporter Carlo Festa explained the difficulties they are facing and why Fortress is in pole position to strike a deal with Suning.
“Suning cannot keep Inter under the current circumstances,” he warned.
“They are a big group with lots of subsidiaries, so you can’t say they have liquidity problems; they have fairly high debt but I think they can deal with those.
“The issue is that they can’t export capital abroad at the moment because the Chinese government would stop them.
“The real question is: would Suning be able to inject another €250 million into Inter (if they weren’t able to get that money from another group, such as Fortress) without any restrictions?
“The government in Beijing is opposing these sorts of operations, so in these conditions Zhang Jindong would have to sell Inter.
“Inter are more or less €400 million in debt with a turnover of roughly the same figure, which is already a fairly heavy financial burden in itself.
“If you then took out a loan for around €250 million, it would mean you’d reach almost €700 million in total debt and that would be unsustainable for a club that isn’t bringing in cash.
“For that reason, the option Inter could study is an operation similar to the one AC Milan did with Elliott, where you run up the debt in the Luxembourg-based part of the club where Inter have their holdings group.
“The Luxmebourg-based group would take the €250 million loan and then send it over to Inter, at which point the Luxembourg-based group and all of Inter would be pledged to the group (i.e. Fortress) who signed this agreement.
“This is the most likely scenario, and the group which is trying to arrange that is Fortress, a very speculative American fund like Elliott.
“Bain Capital Credit is another group which is active in these kinds of operations.”
In addition to Fortress, Suning have attracted interest in recent weeks from BC Partners (to buy Inter outright) and Saudi Arabia’s Public Investment Fund (PIF, to buy a minority stake).
As explained by Festa, however, only one of these options remains on the table for Suning now.
“Negotiations with BC Partners are pretty much over, or at least they are until the end of the season,” he argued.
“This is because Steven Zhang has said Inter would only be sold for €1 billion and nobody in the world would give Suning that money.
“PIF are the only group in talks over purchasing a minority stake, but we need to see how interested they really are in buying a minority stake.
“The Saudis need to improve their international reputation and buying part of Inter would make sense for that reason, but there’s also no financial sense in buying a minority stake at a football club.”
Despite today’s reports suggesting Zhang would reaffirm Suning’s commitment to Inter, though, Festa offered a more pessimistic view on their future at the club.
“In my opinion and from what’s emerging out of China, Inter is no longer a priority for Suning,” he added.
“So if they found a party offering what they wanted, they would sell.
“The problem is finding someone values Inter at €1 billion.”
