The Suning Commerce Group

[Il Drago]

The Bain Capital option seems like we're just setting ourselves up for a Yonghong Li defaulting situation. I have a hard time believing Suning are capable of keeping this thing afloat without major player sales this summer.

And the alternative is the Atalanta model. Our situation is the definition of being caught between a rock and a hard place.

 

[DARi0]

Report: Suning negotiate to refinance debt

Suning are reportedly negotiating with Bain Capital to refinance the current debt of €400m and for a further loan of €200m in order to reach the end of the season.

The newspaper reveals Suning are negotiating with Bain Capital to refinance their current debt of €400m and for a further loan of €200m in order to reach the end of the season and meet their commitments.

> Sounds better than just being instantly forced to sell the club just because Chinese government decided so!

 

[brehme1989]

They're not trying to sell the club though. That's the thing. They want to extend the situation and are not actively looking to sell. They're actively looking for liquidity though.

If they wanted to sell, people would be buying already and the price wouldn't be excessively high. They are evaluating the club as if they won 3 Scudetti and a Champions League with us. Maybe that was their goal or is their goal, but unless you've achieved that or shown that you are on course to achieve that, it's insane to ask for that kind of money here. There's no indication that this team will become a top team in Europe under this management and there's no indication that we can be the highest valued club in Italy either. At least not without a stadium project in place.

I don't know how this ends, but someone really wealthy must really want to buy Inter if we want to be guaranteed of better days.


The only way I see Bain Capital pulling a Paul Singer is if they file for IPO and get a stadium project going. The market actually is not bad for this kind of move. But I don't know how Bain Capital operates or anyone who's worked with them.
https://www.baincapitalprivateequity.com/portfolio

Do you really see Inter being part of that list?

 

[Il Drago]

Zhang Jindong earlier today:

"We should focus our main battlefield, initiate subtraction, redraw the battle line. We will focus on retail business resolutely, close and cut down our business irrelevant to retail business without hesitation"

https://twitter.com/titan_plus/status/1362700542661718016

 

[PHM1605]

Does that mean he is selling Inter or turns Inter into a new mess as Jiangsu Sunning, where even the head coach didn't care and skipped training session? :chan:

Worst case, he won't pay buyout clause for Hakimi and he returns to Real, or players sue clubs as they don't get paid?

Fuck you double Zhang for announcing this IN THE MIDDLE of Scudetto race regardless. Right before Derby. Stupid.

 

[Pimpin]

The Bain Capital option seems like we're just setting ourselves up for a Yonghong Li defaulting situation. I have a hard time believing Suning are capable of keeping this thing afloat without major player sales this summer.

man you are just being dishonest right now. Yonghong Li had 14% interest rate, it basically was known the guy will fold. Lets see what rate we finance our debt at. IIRC last one was 4-5%. Also Suning is not Yonghong Li, albeit the situation seems to be a bit beyond finance in China with apparent crackdown on "shanghai" clique.

 

[brehme1989]

man you are just being dishonest right now. Yonghong Li had 14% interest rate, it basically was known the guy will fold. Lets see what rate we finance our debt at. IIRC last one was 4-5%. Also Suning is not Yonghong Li, albeit the situation seems to be a bit beyond finance in China with apparent crackdown on "shanghai" clique.

To give perspective to this: Venezuela was offering bonds with somewhere between 9-13% interest rate.

 

[CafeCordoba]

Yeah it indeed looks like Suning isn't willing to sell at this point. They went to the market for the bond renewals and financing but faced BC Partners willing to buy the whole club. Now it seems the sale of the majority shares looks unlikely but you never know.

Only thing I want is that nothing will distract the stadium project once the municipal elections have been held in Milano.

 

[kurt0411]

Well Papa Zhang just said, “We’re gonna focus only on retail business, remove all the other irrelevant stuff”. This all but confirms their desire to sell. Good riddance

 

[brehme1989]

Well Papa Zhang just said, “We’re gonna focus only on retail business, remove all the other irrelevant stuff”. This all but confirms their desire to sell. Good riddance

They definitely are looking for ways out but not like that. They are forced by the Chinese to relieve focus from Inter but they will seek as much profit as possible.

The "retail focus" comments were most likely about some real estate investments (they built several shopping malls iirc and no one is willing to fill them up with stores) and they also got involved with supermarkets in China which for some reason didn't go as planned at a time where those businesses are thriving around the world. All of these new investments are looking to go bust due to the pandemic. I don't think Zhang would be talking about investments in Italy to a Chinese public.

The non-retail aspect surely includes Inter, but it's a different animal for the Chinese. The idea was that Inter was going to be in autarky by now and working on autopilot for his son. You have to take that into consideration as well. Selling the club like fleeing would make his son appear like a poor manager and they're trying to promote him as some sort of next leader for China.


From the evidence gathered so far, we have Suning who is reluctant to let go of Inter without a fight. They want someone to buy in a strategic part, or leave them with the minority shares. They're not seeking to sell completely, but they're also having trouble being an agreeable partner for a 'western' investor group, which mostly is related to private equity funds or similar. These funds usually change the organization structure from top to bottom, or just the top, they have plans to buy or sell assets (ie stadium project here), maybe want to get the company listed in the stock market and eventually make a significant profit that exceeds a threshold they have. Each fund has its own situation going there, but let's say that 15% profit is not worth their time and investment. They're usually looking for 80% or higher.

Looking at Suning, without checking the numbers again, from Il Sole 24 Ore I've seen the amount of 600m being thrown as the invested amount by them. And they are seeking for 1 billion. The reported offer is at 750m. At 750, we're talking about a 25% return. Suning evidently wants more for the entire package. This is why they're seeking something like 200-300 for a minority shareholder, but they're unlikely to find that. Maybe something around 500m for a 70-75% is doable, but we're still going with the 750m valuation. They know they can cash in a lot more money in the near future, with a potential stadium going, so they're reluctant to sell off the club.


Their desire to sell will increase day by day as long as the political situation of China remains. They want to divest from international football. If it takes them too long, the government will probably either pressure them to sell cheaper or force them to not be able to finance the club directly or indirectly (sponsorships etc). We are already suffering from the latter due to both the pandemic and the Chinese government decision to interfere. Eventually we may end up in a crap position financially that they'll be forced to sell for far less than 750m.


There definitely is interest from several parties to buy the club. The problem we are facing is that Suning will sell to the highest bidder and not the most suitable investor for us. Imagine having someone unambitious like Kroenke here where profit is all that matters. We'll end up like Roma as long as such a person is here, whether with Suning at least we had this ambition to make noise in Europe, even if it was mostly farts (2017 chinese restrictions that made us toothless in the market, Modric saga, Messi situation, "We'll win the Champions League" etc).


P.S: I'm not sure if Suning has sold their % from a player's agency they used to own before they bought us for conflict of interest or whatever (I don't think Mendes with Wolves had any conditions on that), but for the record, some of the players they represent are:
Eduardo Camavinga
Gareth Bale
Saul Niguez
Wojchiech Szczesny
Thomas Strakosha
Maxi Gomez
Jack Grealish
and a bunch of PL British players that we were never rumored with.

Just saying that they never seem to have tried to onboard players they were investing in already, but instead they trusted that Kia fucker and caused us to lose whatever chances we had in the Europa League some years back which would have been a welcome trophy after the 2011 drought...

 

[Bluenine]

Looking at Suning, without checking the numbers again, from Il Sole 24 Ore I've seen the amount of 600m being thrown as the invested amount by them. And they are seeking for 1 billion. The reported offer is at 750m. At 750, we're talking about a 25% return. Suning evidently wants more for the entire package.

If that is true (that Suning have put in 600m), then we have a problem. Coz Inter's debts are to the tune of 400m, which is one of the highest debt ratios in the world of football. If you can share the source/breakup Sunings 600m investment at Inter, we can check whether the debt is a part of it. It must be coz Suning have largely used debt to finance Inter. If not, practically it means that at 1 billion valuation, Suning make zero profit... which is crazy.

Realistically though, I don't see anyone paying more than 800m for Inter. That is without the debt. So if the new investor takes over the debt, Suning are unlikely to get more than 400m for 100% of Inter. That is probably what is making this such a difficult deal to close in this climate.

 

[Il Drago]

Not exactly Inter related but an interesting article about Chinese government policy in sports industry.

CHINESE INVESTORS FLEE EUROPEAN FOOTBALL AFTER HOME GOVERNMENT POLICY CHANGE

Chinese investors are pulling out of European football en masse. In mid-2017 there were upwards of 20 Chinese-owned clubs in Europe. “There are now fewer than 10, and it’s a dwindling number,” said Simon Chadwick (Professor and Director of Eurasian Sport, Emlyon Business School). In recent months, the owners of Inter Milan (Suning Holdings Group), Southampton (Gao Jisheng) and West Bromwich Albion (Lai Guochuan) have reportedly all been looking to divest equity interest or sell the entirety of their ownership stakes.

Conversations with a pair of authorities on sports within the People’s Republic of China (Chadwick and Greg Turner, Founder of Shenzhen High Performance Event Management) suggest there is a good reason for the flood of exits. Over the last five or six years, the Chinese government has dramatically altered its approach to turning the country into a football power. Basically, they decided “all of the money going overseas was better spent on local development,” Turner said.

Our Take: To understand why Chinese nationals are pulling their money out of European soccer, one must appreciate why the investments were made in the first place. Back in 2014, with the country on the cusp of launching its 13th five-year economic plan, President Xi Jinping stated his intent to turn China into a leading FIFA nation (it’s believed the country would also like to host the 2030 World Cup). While there were no explicit references to football in the plan, one of its “crucial elements was the government calling for more outbound investments,” Chadwick explained.

With the Xi administration urging investors to purchase overseas assets and the country simultaneously striving to improve its domestic football program, it made sense that Chinese billionaires and corporations were pursuing international teams in the mid-2010s. Financial upside aside, the belief was that the Chinese would learn how to operate world-class clubs and inevitably be able to bring that knowledge back with them to help the domestic game. “And very quickly, Chinese investors built up a significant network of European clubs,” Chadwick said.

But by mid-2017, the Chinese government decided the country’s domestic football program wasn’t reaping enough benefits from all of the investment capital deployed within the sport and moved to turn the spigot off. They had woken up “to the fact [that the country] was almost like a carcass being consumed by the world of football’s vultures.” There was this considerable outflow of money, Chadwick said, noting the immense stress the Chinese financial system was under at the time (GDP growth in 2016 was the slowest in 25 years). Taking the position that Chinese investments in international football had become irrational, the Xi administration shifted emphasis from elite football to supporting domestic and grassroots efforts. “There was also a shift in government policy towards promoting inbound investments and incentivizing domestic corporations to invest at home,” he added.

Wang Jianlin was the first domino to fall following the introduction of football reform in China. In February 2018, the Chinese billionaire was all but forced to divest his stake in Athletico Madrid. (He was later awarded a CSL club for adhering to the government’s wishes). Ye Jianming, the founder of CEFC China Energy, followed. In April 2019, he too was pushed to sell the interest he’d acquired in a European football club (Slavia Prague). Ye was later jailed for exposing the country’s economic system to undue risk. Since that time, “pretty much everyone who had spent overseas has started to return home,” Chadwick said. Of course, it’s not as if there is much choice—at least, not if ownership hopes to continue doing business in China. Remember, private Chinese companies are “never really private companies,” Chadwick added. They operate at the mercy of the government.

China’s 14th five-year plan (launched in 2020) formally calls for “money to come back home and for investments to be focused domestically,” Chadwick said. “And it has been rolled out in conjunction with a more draconian state that is acting increasingly bullish toward entrepreneurs and its business people,” he added (see: Jack Ma conspicuously low profile of late). So, it seems safe to assume the number of Chinese owners in European football will continue to dwindle through at least 2025 (when the next five-year plan begins). Turner notes that with local governments now offering incentives for domestic investments, the financial upside to investing in China is also greater now than it was just a few years ago.

Between 2015 and early 2017, Chinese television broadcasters (and digital platforms) also clustered around European football. The competition resulted in companies like Mediapro, PP Sports and Le Sports significantly overpaying for rights. Naturally, “in terms of financial outflows and in terms of delivering return on investment to the Chinese government and Chinese economy, this was not a viable proposition,” Chadwick said (Le Sports has since gone bankrupt). Eventually, those Chinese companies stopped making payments to the leagues.

While Chinese broadcasters have defaulted on agreements with the EPL (Tencent has since inked a one-year deal to broadcast the games), Serie A and Ligue 1, Turner does not believe Tencent will follow suit with the NBA. “[The NBA has] a strong local operation that is focused solely on developing the game in China,” which the government likes to see, he said. Chadwick agreed, though he would not completely rule it out, adding, “The political symbolism [associated] with Tencent defaulting on the NBA would be huge and really could be a prompt to a much wider trade war [with the U.S.].”

https://www.sportico.com/leagues/soccer/2021/chinese-investors-exit-european-football-1234623139/

 

[PHM1605]

Jiangsu Suning is on sale, now they are Jiangsu FC, as Suning is leaving.

The situation is a scary coincidence with which at Inter. They are the China champions, but players & coaches are having no idea what to do. They have not returned yet to prepare for the new season, whilst the official match will begin in a month.

What a mess. We should hope at least Suning don't rage sell all Inter stars to pay their salary. Let alone reinforce the team.

 

[brehme1989]

Jiangsu Suning is on sale, now they are Jiangsu FC, as Suning is leaving.

The situation is a scary coincidence with which at Inter. They are the China champions, but players & coaches are having no idea what to do. They have not returned yet to prepare for the new season, whilst the official match will begin in a month.

What a mess. We should hope at least Suning don't rage sell all Inter stars to pay their salary. Let alone reinforce the team.

I'd honestly take that. if they win the league, they can scram


But in all seriousness, the situation in Suning is horrifying for them as a business and I'm guessing it's mostly political than anything. Remember that Zhang was also "missing" like Jack Ma, for several months? I don't think that's casual behavior over there, there's definitely internal political turmoil that has caught Inter in the middle.


I still see rumours about Evergrande being our main sponsors, so it's all puzzling.

 

[Thoyhoy]

I think every comment about Inter going bankrupt is silly. I remember the situation with Yonghong Li/Elliott a few years ago (that situation was a lot worse than ours) and it went just fine for Milan (all things considered). If they go for the re-financing + new loan deal with Bain Capital, I guess Bain Capital will end up having the club as security ala. Yonghong Li/Elliott. I.e. if Suning fails to pay their obligations, Bain Capital will seize control over the club... not sure if that is really a realistic scenario for a massive company like Suning though. From what I gather this is the route that Suning prefers.

The other option is an outright sale. From what I gather BC Partners are still the front runners, but there are still a difference between demand(1billion incl. debts) and offer (750million incl. debts)

 

[Il Drago]

Jiangsu Suning is on sale, now they are Jiangsu FC, as Suning is leaving.

The situation is a scary coincidence with which at Inter. They are the China champions, but players & coaches are having no idea what to do. They have not returned yet to prepare for the new season, whilst the official match will begin in a month.

What a mess. We should hope at least Suning don't rage sell all Inter stars to pay their salary. Let alone reinforce the team.

I believe Inter are going to have a new ownership before the summer. If Suning are selling their Chinese team that just won the championship then this is clearly a political decision and they will be forced to get rid of Inter asap. What a mess indeed.

 

[K.I.]

Yah looks like they will be forced to sell at a lower evaluation than they wanted.

 

[TheNetworkZ]

They should've taken BC Partners offer

Sent from my SM-G973W using Tapatalk

 

[Il Drago]

Inter CFO Tim Williams:

With the complete collaboration of the relevant footballing authorities, we have reached an agreement with our players for a short-term deferral of their salaries,”

“No delays to paying players were enforced without full consent from all parties and the ruling authorities.

“When we would normally have taken the chance to reduce the club’s wage bill at the end of last season, as well as generating fresh money through player sales, this year the COVID-19 situation has made everything more difficult.

“Even though we managed to reinforce the squad with free transfers and loan deals, we’re probably supporting a level of salaries which is slightly higher than what we’d want.”

 

[CafeCordoba]

I can see if Suning try to want to sell only after we've won the Scudetto. Inter as a club looks better at that point. But as everyone knows our situation, I'm not really sure if they can bump up the price that much even with Scudetto in the pocket. They would have to get a new bond or something to make it to the end of this fiscal year (end of June) and that is probably not going to be cheap (as everyone knows our situation).