Inter Milan Faces Financial Jeopardy if Owner Suning Fails to Repay Nearly $380 Million

FC Internazionale Milano SpA’s majority stakeholder, Suning Holdings Group Co. Ltd., faces a critical deadline to repay a large multimillion-euro loan or risk losing control of the football club[para. 1]. Suning, holding 68.55% of Inter Milan, must repay approximately 350 million euros ($380 million)—comprising 275 million euros in principal and 75 million euros in interest—by Monday[para. 2]. The loan agreement, struck in 2021 with distressed debt investor Oaktree Capital Management LP, stipulates that Oaktree may take over and sell the club if Suning defaults[para. 2].

Due to Luxembourg’s bank holiday on Monday, the funds need to be wired by Tuesday[para. 3]. Amid growing speculation regarding the club's financial health, Inter Milan President Steven Zhang issued a statement explaining ongoing efforts to find an amicable resolution and claiming potential risks to the club's stability due to uncooperative behavior from Oaktree[para. 4][para. 5]. He emphasized that Suning would strive to maintain the club's stability, seeking a peaceful resolution with Oaktree[para. 6].

Inter Milan reported improved financial results for the fiscal year ending June 2023, with losses narrowing to 85.4 million euros from 140.1 million euros the previous year[para. 7]. Nevertheless, financial strain continues to loom, despite the club clinching its 20th Serie A title recently[para. 8].

Suning explored various avenues to repay Oaktree, including advanced discussions with Pacific Investment Management Co. LLC (PIMCO) for 435 million euros of new funding, although insufficient time was available to finalize the deal before the deadline[para. 9]. While Oaktree had proposed an extension deal, Suning preferred to progress discussions with PIMCO due to more favorable financing terms[para. 10].

Suning's challenges are compounded by a prolonged financial crisis stemming from its extensive borrowing for acquisitions[para. 11]. In 2020, the company faced significant financial troubles, reporting a 3.9 billion yuan net loss on 258.4 billion yuan revenue, a 4% decline from 2019[para. 12]. Additionally, its total liabilities potentially exceeded 200 billion yuan by 2021[para. 12].

The situation evolved further when a consortium led by the Jiangsu provincial government, including Alibaba Holdings Co. Ltd., invested 8.8 billion yuan in a bailout, assuming control of Suning’s retail arm[para. 13]. Despite this, the subsidiary's financial woes persist; its losses narrowed by 70% to 4.1 billion yuan last year, but its debt-to-assets ratio soared to 91.67%, with short-term debts surpassing 43 billion yuan[para. 14]. Recently, the Shenzhen Stock Exchange scrutinized Suning.com’s financial indicators, casting doubt on its operational sustainability[para. 15].

The story was contributed to by Han Wei and Bloomberg, with contacts provided for reporters Wang Xintong(xintongwang@caixin.com) and editor Kelsey Cheng(kelseycheng@caixin.com)[para. 16].