Could someone explain different possibilities of re-financing Oaktree loan? With the risks of constantly losing our values and floating interest rates, re-financing sounds to me like you crash your car again and again until it is fully broken.
This is gonna be one of my long winded posts, so I apologise
I had this discussion with another member on the forum (cant remember who) quite recently, actually. A few months back, but I cant dig it up now. I'm not a finance professional, so my views are my own only - I get the impression they were, so i'll relay on their views too.
In their view, it seemed most likely that Inter was just going to refinance with Oaktree, and continue to get milked for interest on our revenue for ever increasing amounts. What the 'end game' of that is, I dont know - seems weird because I dont think it can last that much longer, esp in a higher interest rate environment. If we re-fi 300mil at 15%, for example, we are talking years of runway left, not decades, before negative equity hits.
If we park the financials for a sceond and go from Zhang's perspective, it seems clear to me he wants to try to cling on to the club. The thing that doesnt make any sense is... to what point? Even if China changed its capital outflows rules - which it wont, after seeing what happened to Russian wealth after the invasion of Ukraine - Suning is not a positive business right now, and the Zhangs shareholding of Suning is significantly reduced. So there's no 'easy' prospect to return to subsidising the club as they did in the first few seasons. That, with also the new FFP regulations, just takes that kinda off the board. It's not like Inter is some great asset they can hide internationally from the CCP - we're not a cashflow producing asset, and we're practically just a massive liability on a balance sheet for now, so its surely just an ego play?
A minority investor could be an option, but I dont know why you'd do that. If I was to buy 40% of Inter, say, for 400m, I have no decision making power, its not a cashflow producing asset, and realistically, the revenue of the club isn't going to significantly change in the next few years. In terms of 'achievable' revenue, we've got all the easy stuff. We're in the CL. We've got our shirt sponsor, main sponsor, etc, locked in for years. The only obvious revenue points I see left are minor (training ground sponsor, training kit sponsor), or risky/capital intensive (regular CL SF appearances, or building a new stadium). As a minority investor, too, you'll be constantly dipping into your pocket to re-capitalise the club every season. So its not 400m for 40% (unless you want to have share dilution), its 400mil for 40% now but probably 20-40mil a season for the next few years until we break even.
From a sale perspective, things also get dicey. To buy this club, you'd want to wipe our debts (Whether they are wiped as part of the transaction, or kept with the owner doesnt matter) - so between the bonds and loans you're looking at like 600mil already. You've probably got a 3-5 year plan to break-even, which means subsidising maybe another 150-350mil to the club in that time. That means you're looking at like 800mil already before you're paying anything for the equity of the club.
The thing is for us, we're in a difficult position. As mentioned above, there isnt loads of 'easy revenue' for us to grab. Yes, I know, there are people on here who will be like BUT NEWCASTLE. Well, that's the big difference - investing into Newcastle (e.g. pumping cash to sign players) means you can get into the CL, you can get into the top side of the Premiership teams. The TV revenue and the prize money from the CL is *massive*, so you've suddenly massively increased revenue (and thus your FFP compliance). Look at how PSG are about to get fucked if Mbappe leaves on a Bosman, for example - and, again, they got fake sponsorships etc to help them drive their revenue through the roof.
The problem, for me anyway, is that we arent really an attractive asset. As mentioned above, you're looking at like 800mil euros just to wipe our debts and subsidise the club, and then if you have to pay another 500mil+ for the equity, suddenly you're at 1.3bil. The next best investment you can make at Inter is a new stadium - well, if Milan are going solo, then we're looking at maybe another 800mil cost, so suddenly the cost is 2.1 billion. For 2.1 billion, you can buy almost any non top-6 (?) premiership club, inject in several hundred million in signings, and massively increase revenue by aiming to make the CL. The problem is from where we are, the ease of incremental revenue is now very hard. I need to see if the data backs this 100%, but I cant think off the top of my head in recent years that any Italian club was bought when already in the CL? Milan, Roma, us, all of these transactions were made when the clubs were out of the CL - presumably, specifically to try to drive significant revenue increases by getting into the CL.
Sorry for the long winded post, but its useful to be detailed sometimes. It doesnt boil down to a single flippant answer, as much as that will undoubtedly turn me into 'CCCP SHILL .h.'
tl;dr I think the only real option for Inter is to be sold. That being said, I think Zhang is likely to try to refinance. In the new interest rates, though, that new loan would be fucking killer for us potentially. In a refinanced world, in the long term, its likely to be a default, but honestly, Zhang dont win at all out of that. It just doesnt make any fucking sense to me at all for them to do that. And you'd also end up with Oaktree having to inject money to cover bonds, etc. I dont think - despite some precedent like Elliott - that Oaktree want to run a football club, and with mounting interest/principle as we re-finance, you quite quickly end up to a place where the outstanding loan is worth not far off what Inter is worth... in which case 'default and quick profit' isnt a business strategy.
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