Inter's Financial Situation

Il Drago said:

Based on this official document published by Calcio e Finanza website Oaktree loan to Suning has 12% interest rate.

The same website reveals that LionRock Capital shares at Inter (31%) have also been offered as collateral to Oaktree for the loan.

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Does this mean they can't take control over the club if Sunning don't pay back?

Only of the collateral that is on the table. Not everything.

Abu Bader said:

Does this mean they can't take control over the club if Sunning don't pay back?

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Thanks .h.

That's the opposite of the news at the time about how they could take over the whole club.

Well, what we don't know is what the collateral is or the terms of it. If it's only 30% then that's all the ownership they can take, but there may be terms that allow them to buy the rest or force a sale etc etc

Il Drago said:

Based on this official document published by Calcio e Finanza website Oaktree loan to Suning has 12% interest rate.

The same website reveals that LionRock Capital shares at Inter (31%) have also been offered as collateral to Oaktree for the loan.

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INTER FINANCING DEAL ALREADY COST €21M IN INTEREST FOR 2021​

More details are emerging about the financing deal that Oaktree gave to Suning in order to keep Inter afloat, with a massive 12 per cent interest rate already charging €21m for 2021.

Calcio e Finanza claim to have viewed the paperwork of the Luxembourg vehicle for the financing and saw that Oaktree guaranteed €292.12m in financing with a 12 per cent interest rate.
That was handed to Grand Tower Sarl, one of the holding companies that Suning use to control Inter.

Much like when Elliott Management repossessed Milan’s holding company when Yonghong Li failed to keep up repayments on a loan with a huge interest rate, if Suning did not maintain the payment schedule, the club would effectively be taken over as an asset via this holding company Grand Tower.

The financing deal was sealed in May 2021 and Grand Tower isn’t the only asset that could be repossessed, as Lion Rock is also included, so together would represent 99.6 per cent of Inter shares.
The interest alone for the year 2021 was therefore €21m and Suning have already paid that sum.

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12% seems desperate, never seen such an interest rate. How can you agree to something like that?

DARi0 said:

INTER FINANCING DEAL ALREADY COST €21M IN INTEREST FOR 2021​

12% seems desperate, never seen such an interest rate. How can you agree to something like that?

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Maybe they paid by credit card

I guess my post was misunderstood. Maybe i didn't express it well. My apologies.

Till now we knew Suning shares at Inter which amount to 69% were offered as collateral for the Oaktree loan. Now it's reported LionRock shares which amount to 31% have ALSO been offered as collateral for the loan. So basically if Suning fail to repay the loan Oaktree get 100% of the club.

Ahh okay. Thanks, that makes a lot more sense. I guess then the risk of default is basically minimal - 700-1 billion in collateral for a 250m loan. Elliot/Milan are a precedent though I guess.

But what this all means? Suning needs to pay that 300m about year from now, in 2023 right before the summer. How will they achieve this?

they will sell everyone

CafeCordoba said:

But what this all means? Suning needs to pay that 300m about year from now, in 2023 right before the summer. How will they achieve this?

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firstly, the maturity date is 20th May 2024, not 2023.

292 mil x 12% is 35 mil euros p.a. interest. 292 + 3 x 35 mil = 397 mil over 3 years, 6 monthly repayments is 66 mil, 3 monthly repayments 33 mil.

unless inter are only paying off interest as they go, they will have already made payments cutting into the principle according to some sort of agreed upon payment schedule, like any loan

knowing the majority of hakimi and lukaku's sales didn't go straight back into new players, i'm assuming a large chunk of it went into paying off an installment or two

CafeCordoba said:

But what this all means? Suning needs to pay that 300m about year from now, in 2023 right before the summer. How will they achieve this?

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None of the things Suning have done makes sense. They aren't willing (or able) to pump money to Inter but they also don't consider offers lower than 1 billion. They took a loan with an insane interest rate and as far as we know most of it just sits on the bank. As for the repayment of the loan, i can't see how they could take money from Inter to repay the loan when the club itself has huge budget losses. I may be wrong but imo sales and wage bill cuts are mostly about balancing the books.

not the type of milan fan to pray and hope for your downfall... for serie a to thrive, both milan clubs need to be competing at the top.
i really hope you guys get this sorted, and I knew it was bad... but this thread gives me the impression it's much worse than outside fans know.
good luck and get it sorted fast. we're headed to the moon, as a league... it's coming.

TheMilanista said:

not the type of milan fan to pray and hope for your downfall... for serie a to thrive, both milan clubs need to be competing at the top.
i really hope you guys get this sorted, and I knew it was bad... but this thread gives me the impression it's much worse than outside fans know.
good luck and get it sorted fast. we're headed to the moon, as a league... it's coming.

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or suning can go the way of li yonghong and then we get repossessed by the bank (oaktree)

either that or build that new stadium and help us fix our bottom line

Il Drago said:

None of the things Suning have done makes sense. They aren't willing (or able) to pump money to Inter but they also don't consider offers lower than 1 billion. They took a loan with an insane interest rate and as far as we know most of it just sits on the bank. As for the repayment of the loan, i can't see how they could take money from Inter to repay the loan when the club itself has huge budget losses. I may be wrong but imo sales and wage bill cuts are mostly about balancing the books.

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Don't want to get into politics but I'm convinced these fucking lunatics are haplessly hoping against all odds for a government bailout - which they won't get.

Think of Inter as a large vase with water leaking from numerous cracks. What they're doing is essentially covering some of these cracks with sticky tape and hoping the government will eventually give them enough money to buy a new vase. In the meantime, the water continues to leak, merely at a slower rate.

I suspect they have no other strategy than to reduce costs while they sit and pray. The only questions remain how long they are willing to wait and how much will the fans and the clubs performance suffer in that time.

the whole situation smells a bit off.
why would suning accept junk loans against the club if they had any serious intention of keeping it?

As others have said, Suning is just plugging the cracks until they default. Oaktree takes over until they can find a buyer. They won’t care because they’ll still be getting interest payments at inter’s auto-financing expense and obtain a pretty good deal on an asset like inter.

Is there even a realistic way to get out of this mess without slipping into another banter era?

phonk said:

Is there even a realistic way to get out of this mess without slipping into another banter era?

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Bingo! That is the question.

RickyMaravilla'sRightFoot said:

the whole situation smells a bit off.
why would suning accept junk loans against the club if they had any serious intention of keeping it?

As others have said, Suning is just plugging the cracks until they default. Oaktree takes over until they can find a buyer. They won’t care because they’ll still be getting interest payments at inter’s auto-financing expense and obtain a pretty good deal on an asset like inter.

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They don't intend to default, nor do they want to. I really do think they want to keep the club.

Like I said, I'd wager their "strategy" is to:
1) keep taking loans until their financial situation improves and they can go back to "regular" ownership
2) until then, keep cutting costs and have the club become self-financed in order to reduce further losses

Imagine you bought a house using money loaned from the bank. You need to pay back mortgage but your mortgage payments are greater than your income. So, you spend as little of your income as possible and you also start selling your various assets such as your car, your TV, your piano and furniture, just to help you make those payments.

The problem is that while you might keep the house, all the while, your assets are obviously disappearing until you have nothing worth selling in your empty house. You're sleeping in a sleeping bag on the floor instead of a bed. You've got no luxuries like a TV to watch, or video games to play. Also, as you're saving your income to pay loans instead of spending it on comforts, your quality of life reduces further because you're buying cheap and nasty groceries instead of the delicious gourmet shit.

Your intention is to tough it out and get by on the bare basics, selling assets if required, until you get a pay raise at work and your income becomes greater than your mortgage. Slowly, incrementally, you'll have a tiny bit of money left over after paying your monthly mortgage payments and month after month, if you diligently save the leftover profit, you can eventually afford to buy a piece of shit second hand 2001 Toyota.

phonk said:

Is there even a realistic way to get out of this mess without slipping into another banter era?

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See above. At some point, we will run out of assets worth any money, like Lautaro or Skriniar, and our quality as a team will be complete shit as well. All so that Suning can afford to keep the house. It's unsustainable.

In bottom line, Beppe and Ausilio should make miracels while we should hope that by 2024 Suning would be out and Oaktree will take control of the club. I believe they will do what elliott did with Milan, but unlike Elliott, their job should be easier.

I dont even care if Chinese Gov' will let Suning a free hand to do what ever they want. Inter cant be depend by Chinese Gov which doesnt give a fuck about anything but China.