Il Corriere dello Sport suggest that Inter president Steven Zhang could be forced to sell the club to Oaktree, while contract renewals for Lautaro Martinez and Nicolo Barella are on hold. With the looming deadline of May 20th, marking the expiry of the €275 million loan extended by Oaktree to the Suning group still under Zhang’s control, the club faces essentially two scenarios: the enforcement of the repayment by the fund or the sale of the club.
Il Corriere dello Sport report that in recent months, there had been some optimism regarding the prospects of refinancing the loan. However, the application of the 12% annual interest rate compounded with the PIK mechanism (Payment In Kind, where interests are “paid” with additional debt) has inflated the debt to nearly €400 million. If an interest rate of 15-20% were to be applied, as speculated, the debt would soar to €500-550 million over two years. It’s unlikely that Oaktree would accept this prospect without further guarantees.
The enforcement of the repayment would expose Zhang to considerable risk: Oaktree would acquire ownership of Inter by liquidating the difference between the theoretical value of the club (to be determined by an appraiser) and the amount of debt. When Milan’s former owners Elliott took over from the previous Chinese owners of the club, an appraisal by Professor Gualtieri estimated the club’s value to be in the range of €431 to €610 million. Similarly, in this case, if the appointed appraiser were to develop a conservative estimate (or a prudent price range), Suning would leave behind millions, exiting the scene with little. If the valuation were to be significantly high, Oaktree would face an excessive investment for a fund obligated to adhere to precise parameters tied to the capital it raises. The uncertainty would be detrimental to both parties.
In the second scenario, the arrival of a buyer would allow Oaktree to recoup the loan, offering Zhang a counter value closer to market benchmarks and perhaps the option to convert the potential difference from the sale into a minority stake. It’s worth considering that Zhang’s asset hunt, triggered by the second Chinese bank, jeopardizes the millions he could extract. Indeed, someone has recently initiated a valuation process for Inter, entrusted to an international advisory firm to be selected shortly. Almost certainly, this is a buyer Oaktree would have involved in the operation, and more information will emerge in the coming days.
Meanwhile, the club has announced (with legitimate pride from management) a profitable semester of €22 million: an unforeseen outcome months ago achieved with revenues up by 34.6% compared to a year prior. The first six months’ revenue (€265.4 million) incorporates approximately €70 million from the market (+€41.7 million compared to December 31, 2022, when it was €28.8 million). The first semester also includes the bulk of Champions League rights, while the second semester may yield slightly lower revenues. Overall, barring market interventions in June, a much more contained loss can be projected compared to the previous year, estimated between €20 and €30 million: a result that would confirm the gradual process of balancing the books. Additionally, the shareholder has converted €22 million of financing out of the €128 million present at the closure of the last financial statement.
