The valuation of Inter Milan is yet to be determined in the event that Oaktree Capital take control from Suning.
This according to today’s print edition of Rome-based newspaper Corriere dello Sport, via FCInterNews.
It is now widely known that, if Suning were to default on the well over €300 million that they owe to US-based fund Oaktree on their €275 million loan, control of Inter will pass into the hands of the fund.
This has raised the spectre of the transition in ownership of AC Milan from Li Yonghong to Elliott Management in 2018.
In that instance, Elliott simply took control of the Rossoneri when Yonghong defaulted on his debt.
The Chinese businessman did not receive a fee.
Recent reports have suggested that that there is actually a clause in Suning and Oaktree’s agreement will entitle the current Inter owners to financial compensation should they default.
How Valuation Of Inter Determined If Oaktree Take Control From Inter
According to the Corriere, the substance of the agreement between Suning and Oaktree is not quite as simple as Inter being collateral that the US-based fund will take over if the Nerazzurri owners default.
Rather, per Luxembourg banking law, the passage of control of Inter would cover Suning’s obligations in the event that they cannot pay the amount that they owe.
But if the valuation of Inter is higher than what Suning owe to Oaktree – less than €400 million with interest – then Oaktree would liquidate the rest to Suning.
In other words, an evaluator would determine the value of Inter. And then, the amount that Suning owe to Oaktree will be subtracted from it.
Oaktree would pay that final sum to Suning, and then take control of Inter.
And it remains to be seen exactly how the evaluator would come to their final valuation.
The debt bond of nearly €400 million that Inter hold will have to be considered.
Then, an evaluator could conclude the Nerazzurri are worth somewhere in the region of €1 billion, for example. That would be roughly in line with the €1.2 billion that RedBird Capital paid to acquire AC Milan from Elliott Management.
So then, the total valuation of Inter would stand at in the region of €600 million, for example.
That would more than cover Suning’s obligations to Oaktree. Therefore, Oaktree would be required per the terms of their agreement to pay Suning the difference.