Oaktree Capital Management

[javier_zanetti <3]

The value of Inter is a derivative of several parameters and among the main ones is sporting success. IMO Oaktree will continue suning's line of minimal investment to preserve the staff and a high level of competitiveness.

 

[Damageplan]

Obviously Oaktree will keep Inter competitive. We are now an asset which you want to sell as profitable as possible and for that you need it not diminished.
We should not expect any change in our management strategy.

 

[Jane The Virgin]

A guy in a Facebook Inter fan group wrote something along the lines:

Imagine Oaktree introduce themselves "IM OAKTREE"

funny stuff

 

[crzdcolombian]

at a company I worked at we held 3 billion of another companies money. They had to pay us every month and make sure they were over a certain percentage or we could keep the 3 billion

It was always a joke when the auditors would ask us about the risk of this happening. We would laugh about it and just say the risk is we would all have a massive party and huge raises.

Oaktree today is having that party and people are circle jerking and getting those raises because of extreme negligence/stupidity of another company.

Congrats to our new owners

 

[Gal]

The value of Inter is a derivative of several parameters and among the main ones is sporting success. IMO Oaktree will continue suning's line of minimal investment to preserve the staff and a high level of competitiveness.

You think they accept such imbalances on the account that means they have to constantly inject money into the undertaking. It won’t take long before that approach end up costing them more then the actual price they end up paying for the club.

The problem for inter is currently that it spend more then it can generate you can be absolute certain that Oaktree will fix that imbalance as that also improves its market value, but to do so mean expenses needed to be reduced and revenue needs to be increased.

Oaktree is no sugars daddy

 

[javier_zanetti <3]

You think they accept such imbalances on the account that means they have to constantly inject money into the undertaking. It won’t take long before that approach end up costing them more then the actual price they end up paying for the club.

The problem for inter is currently that it spend more then it can generate you can be absolute certain that Oaktree will fix that imbalance as that also improves its market value, but to do so mean expenses needed to be reduced and revenue needs to be increased.

Oaktree is no sugars daddy

They are not, but the way that Inter has been doing for two years is also proving itself in the financial aspect. Every year the losses decrease by tens of millions and we finished the first half of the current season with a positive budget balance.

Of course, it won't stay that way and we will end the season with a negative balance, but this indicates a trend that was created following professional successes. Professional success means higher income from match days, broadcasting rights and sponsorships. Selling significant players will hurt these revenues, lead to a decrease in professional success and, unlike the current process, will not indicate a trend, i.e. will not really solve Inter's problems.

I don't think they are sugar daddies, but Inter are running in an extraordinary way that proves itself on the pitch and in the books. I don't see oaktree changing that.

 

[satubito]

Just don't sell to the Fin please.

 

[SiamoNoi]

I for sure can't be only one sick of hearing every day frases "we are spending more than we are generating". Give us actually numbers. Cause I'm pretty sure I recently saw somewhere that that is not the case anymore.

 

[vex]

Reuters sources confirming oaktree is here medium to long term. And it sounded like it from that statement.

 

[ElDuccio]

22 May, exactly 14 years after the CL final. And like Zanetti said about the scudetto win at the 22. April, before leaving house with he's family: We will win, 22 is the number of destiny". Let's hope it will mean the same for Oaktree.

 

[YoramG]

Reuters sources confirming oaktree is here medium to long term. And it sounded like it from that statement.

I’m not fussed about this tbh. The management have been doing all the heavy lifting and I don’t see a reason for Oaktree to touch what is very much a winning system.

At the very least, I don’t see it being any worse than it was under Suning. I also don’t expect them to inject a single penny.

 

[forzainter257]

I think it would be better to be sold to some business people from either Canada or the USA as these countries have larger pools of potential fanbase.

 

[.h.]

I for sure can't be only one sick of hearing every day frases "we are spending more than we are generating". Give us actually numbers. Cause I'm pretty sure I recently saw somewhere that that is not the case anymore.

arent public records beautiful

https://www.inter.it/media/downloads/2023/2023_10_27_13_57_35FC%20Inter%20Group_Consolidated%20Annual%20Financial%20Statements_FY%20ended%2030%20June%202023.pdf

page 14

we spent 40mil more than we made last year, and thats without the financing costs. Factor in financing and it goes down to 85mil loss. (page 15)

21-22, we spent 88mil more than we made, and that was before financing costs

 

[Gal]

I for sure can't be only one sick of hearing every day frases "we are spending more than we are generating". Give us actually numbers. Cause I'm pretty sure I recently saw somewhere that that is not the case anymore.

Because Inter literally are, as H also shows… or just look the numbers up yourself!

This is the truth for most teams in fact . It’s just incredibly difficult to generate profit on a football team especially if you don’t extend your core business.

If Oaktree is for the long haul we can be absolutely sure they look into changing that, not gonna be easy thing to do, especially as wages and transfer constantly tend to undermine any improvement on revenue that you make.

It’s going to be interesting to see Osktree stance on Martinez wage demand, can’t possibly imagine they are all that excited

 

[.h.]

you may also be thinking about our h1 results being profitable. The only really meaningful comparison of that is year-on-year, profitable H1 doesnt mean profitable H2. For example, revenues are higher (a lot of european bonuses paid, season ticket revenue, plusvalenza, etc) and some costs are out (new signings dont have full amortisation, results bonuses not paid yet, etc)

 

[Gal]

I’m not fussed about this tbh. The management have been doing all the heavy lifting and I don’t see a reason for Oaktree to touch what is very much a winning system.

At the very least, I don’t see it being any worse than it was under Suning. I also don’t expect them to inject a single penny.

Oaktree do not care one bit about us being a winning system not one bit, they care about delivering returns to their investors, it means nothing to them when Inter win if it dos not equal more returns. what matters is that they don’t loose money and don’t have to inject money into the undertaking. They offload this team when that is most profitable for them to do so. I’m rather convinced they try making the club self sustaining as one of the first things they do if they really are in for the longer haul.

 

[Cittadino]

It gives me hope that they want to keep Marotta, means they are not completely clueless. As for everything else, we'll see.

 

[.h.]

there are two ways to return value to their investors, ultimately
1 - EBITDA positive
2 - valuation increase in the sale

in a normal private equity cycle, the PE house would invest money in the business aiming to do things that generated ROCE. For Inter, building a stadium is one way to guarantee a return on that money - if its +15m ebitda and 700m asset on the books, then sale valuation is at least +700m and probably 15x P/E on the 15m, so say another 225m.

They could also wipe the bonds, as that's directly on net equity impact and, yet again, more free money for Inter - esp with the interest (I of EBITDA) impact


but ultimately it comes down to what they want to do. I dont think the above is a particularly realistic scenario, but it is conceptually one that could happen..

 

[Pimpin]

FT Article

Oaktree seizes control of Inter Milan after Chinese owner fails to repay loan​

Retailer Suning warns investment firm that its action could ‘seriously jeopardise’ Italian football club

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 had “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 Inter Milan 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 club’s finances had been ravaged by the pandemic and the loan allowed its owners to inject more capital. 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 was 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 was “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 propped 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.



Bloomberg Article

Inter Milan Seized by Oaktree After Chinese Owner Defaults on Debt​

• Suning Holding failed to repay €395 million loan to Oaktree
• Collateral backing the debt was majority stake in the club

Oaktree Capital Management took ownership of Italy’s Inter Milan, one of the most storied football clubs in Europe, after its Chinese owner defaulted on a loan.

The US fund has taken control of the club as of Wednesday after conglomerate Suning Holding Group Co. failed to repay €395 million ($428 million), Oaktree said in an emailed statement. The collateral backing the debt was a majority stake in the football club.

“Our initial focus is operational and financial stability,” Alejandro Cano, managing director and co-head of Europe for Oaktree’s global opportunities strategy, said in the statement. Oaktree said it was committed to the long term success of the club and recognizes its responsibilities to the fans.

Inter won Italy’s top domestic Serie A league this season and was runner-up in the UEFA Champions League last year. Inter’s new owners look set to make changes to the club’s board, bringing in more Italian and European members, according to people with knowledge of the plans.

Oaktree, a $192 billion asset manager known for distressed debt investing, has form in taking over football clubs: it did so with troubled French side Stade Malherbe Caen in 2020, and has since exited its stake. Oaktree co-founder Steve Kaplan is also an investor in Welsh team Swansea City.


It also isn’t the first time a creditor has taken ownership of a football club in Milan. In 2018, Elliott Management swapped the debt of AC Milan into equity in the club after the previous owner defaulted on its liabilities.

For Inter, Suning had been in talks with Pacific Investment Management Co. to refinance its debt in recent weeks, but it couldn’t get a deal signed before the Oaktree loan came due on Tuesday.

Suning’s takeover of Inter in 2016 marked the high-point of Chinese involvement in European football. A number of Chinese tycoons embraced a government push to transform football in the country by predominantly buying stakes in famous clubs in Europe. However, domestic financial struggles have led to the loss of positions in clubs including Aston Villa and Atletico Madrid.


Los Angeles-based Oaktree loaned the money to Suning in 2021 to help support Inter’s finances as the pandemic kept stadiums closed to the public. Documents signed at the time and seen by Bloomberg News stated that following a default, creditors or representatives acting for them were entitled “immediately and without demand, advertisement or notice of any kind” to enforce the pledge granted by Suning, including seizing collateral if repayment isn’t possible.

Following the Oaktree takeover, Inter still has some outstanding liabilities, including €415 million in high-yield bonds sold to institutional investors and set to mature in early 2027. Those notes are issued by Inter Media and Communication SpA, a unit owning the club’s broadcast and sponsorship rights. The cashflow from those first repays obligations to bondholders, before trickling through to the rest of the group.

Inter Media’s 6.75% notes due 2027 were little changed on Wednesday, trading at around 98.6 cents on the euro, according to data compiled by Bloomberg.

 

[Dave54]

“find an amicable solution” and warned that its “behaviour now poses potential risks to the club that could seriously jeopardise its stability”. Such a bullshit statement.