With the due date for their sizable loan from Oaktree Capital looming closer than ever, Suning are at a crossroads at Inter Milan.
The situation is highlighted in today’s print edition of Turin-based newspaper Tuttosport, via FCInterNews.
By now, the situation concerning Suning, Oaktree, and Inter is well-known.
In May of 2021, the Nerazzurri owners obtained a loan from the US-based fund, with financing of €292.12 in total. This money was to cover operating costs at the club at the height of its pandemic-related financial crisis and liquidity issues.
The interest rate on this loan was 12%.
And the agreement between Suning and Oaktree was clear. Suning put Inter up as collateral, meaning that if they cannot repay the full amount plus interest by the due date, control of the club will pass into the hands of Oaktree.
That due date comes in May of next year. Therefore, it is only a matter of months before that decisive date arrives.
And the money at stake is no small amount. Tuttosport note that the figure on the table with interest on December 31 of last year was €329.6 million. Therefore, it will be well over €350 million when all is said and done.
Refinance Oaktree Loan Or Sell – Suning Need To Make A Decision
There is certainly no chance of Suning repaying the loan and interest next May.
Therefore, there are two options for the Inter owners.
One would be for Suning to refinance the Oaktree debt. And that is the course of action that Nerazzurri President Steven Zhang has indicated he wants to take.
A big question would then be Oaktree’s willingness to negotiate a new agreement.
According to Tuttosport, Oaktree would seek a new agreement with conditions of 22% in order to renegotiate with Suning.
And alternatively, a new fund could be brought in.
Suning have been working with US-based investment bank Goldman Sachs to find other funds. The aim would be to find better conditions than the 22% interest Oaktree are asking for.
Tuttosport note that Italian business newspaper Il Sole 24 Ore have named two new US-based funds who Suning could find an agreement with to restructure their Oaktree debt.
These are Sixth Street and Ares Management.
The alternative, however, would be for Suning to sell Inter.
The rumours of a possible change in ownership have been persistent for what has now been years, as Suning’s financial situation at Inter has become precarious.
In recent months, the most concrete possibility has appeared to be a Middle Eastern consortium led by Bahrain-based fund InvestCorp. However, Tuttosport notes, there is always the prospect of interest in buying Inter from Suning from the US.
And on the other hand, there is the possibility that Oaktree could simply wait for time to run out for Suning.
If control of Inter were to pass into the hands of Oaktree, then the US-based fund could manage the sale of the club.
Another key variable is the meeting of Inter’s board of directors later this month. The board meets on October 26.
One key item on the agenda will be to approve a new director to the board.
If the director has a connection to Oaktree, it could indicate something about the fund’s strategic intentions regarding Inter.