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Oaktree Capital has moved to seize control of Inter Milan after the football club’s Chinese owners failed to repay a €400mn loan in time.
Los Angeles-based Oaktree, one of the world’s biggest distressed debt investors, said on Wednesday that it has “assumed ownership” of the newly crowned champions of Italy following Chinese retailer Suning’s failure to repay a three-year loan that expired on May 21.
The move marks the culmination of a fierce public battle between Oaktree and Suning over the newly crowned Italian champions and thrusts the $192bn investing powerhouse into owning one of the world’s most famous clubs — the first time it has ever owned such an asset.
Steven Zhang, the 32-year-old son of Suning’s founder who he had installed as the club’s president, over the weekend accused Oaktree of undermining attempts to “find an amicable solution” and warned that its “behaviour now poses potential risks to the club that could seriously jeopardise its stability”.
In recent weeks Suning had attempted to negotiate a refinancing with US bond giant Pimco but these talks were complicated by Oaktree and ultimately proved unsuccessful.
A person close to Oaktree said that Suning had had “plenty of time” to refinance the three-year loan. It was not Oaktree’s “base plan” to seize ownership of the club “but at some point we need to take action to protect our investment”.
Suning bought a majority stake in Inter in 2016 and received a €275mn emergency bridge loan from Oaktree in 2021, secured against the stake.
The football club’s finances had been ravaged by the pandemic and the loan allowed its owners to inject more capital into the club. Since then the amount outstanding increased to about €395mn, due to the loan’s annual interest rate of more than 12 per cent.
Inter’s precarious financial situation contrasts with its success on the pitch.
Alejandro Cano, managing director and co-head of Europe for Oaktree’s Global Opportunities strategy, said on Wednesday that Oaktree’s initial focus is ensuring “operational and financial stability” for the club, which last month beat arch-rival AC Milan to become champions of Serie A, Italy’s top football league.
Oaktree had anticipated that Suning would sell the club before the loan reached maturity and structured the transaction in such a way that it could benefit financially from a sale.
Suning has been working with advisers Raine Group and Goldman Sachs for at least 18 months but has failed to find a buyer.
The person close to Oaktree said the group is “in no rush to sell the club”. They added: “We are patient investors . . . We’re planning to invest time and effort.”
A shake-up of Inter’s board is now on the cards. “There’s an opportunity at the board and outside the board to connect with the community, the institutions and the companies around Milan,” the person close to Oaktree said.
Cano added: “We are committed to the long-term success of the Nerazzurri and believe our ambitions for the Club are united with those of its passionate fans in Italy and around the world.”
In the three decades since Oaktree was founded by Howard Marks and Bruce Karsh, it has carved out a reputation for investing where others fear to tread.
As well as bailing out Suning three years ago, it helped a Chilean airline emerge from bankruptcy and propping up the heavily indebted business empire of an Indian commodities tycoon. Two years ago it seized a vast plot of land in Hong Kong — earmarked for a Versailles-style mansion — from Chinese property developer Evergrande.
Losing Inter to Oaktree is another blow for Suning, which has struggled to finance its debts amid China’s property crisis and the fallout from the pandemic.