Inter Milan owner seeks $ 200m in emergency funding


Updates from FC Internazionale Milano SpA

Chinese owners of Inter Milan are rushing to raise at least $ 200 million in emergency cash, after the Italian football club’s finances have deteriorated due to the pandemic and heavy spending on top players.

Suning Holdings, the retail conglomerate that owns a majority stake in the Serie A squad, is seeking new investment by the end of the year in response to a financial crisis at the club, according to three people familiar with its finances .

Suning’s challenges with Inter Milan come as the retailer, which is backed by Jack Ma’s Alibaba, faces questions over its heavy debt load in China.

The club was in exclusive discussions with private equity group BC Partners in recent weeks over a potential investment, but those talks ended after the two sides could not agree on the valuation, according to people with knowledge of the subject which confirmed the information of the Italian media this week.

The club continues to engage with BC Partners as well as other potential investors, including distressed debt funds such as Ares Management and Fortress Investment Group, owned by SoftBank. Other people monitoring the situation include Swedish private equity group EQT and US firm Arctos.

Those talks range from discussing an outright acquisition of the club or buying a minority stake, according to several people familiar with the ongoing talks.

Suning is working with Goldman Sachs to advise on fundraising options.

These people added that negotiations with BC Partners failed over a valuation of the club, with Suning estimating it to be worth more than 900 million euros. Two people familiar with the talks said BC Partners valued the group at just € 750 million.

Those talks have become critical due to the club’s precarious financial situation, which requires an injection of cash to continue operations next season, according to three people with knowledge of the situation.

A person close to the club’s management said Suning is committed to supporting the club financially throughout this year.

Some of those who were aware of the talks added that Suning was seen as much more likely to sell a stake, even if it meant suffering a loss on his investment, rather than allowing the club to go bankrupt.

Inter Milan is led by President Steven Zhang, the 29-year-old son of Zhang Jindong, the billionaire founder of Suning. After spending 270 million euros for acquire the club in 2016, Suning authorized spending hundreds of millions of euros on star players such as Romelu Lukaku and Christian Eriksen to seek a return to the top of Italian and European football.

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The “Nerazzurri” have faced a cash shortage over the past year. The club suffered a pre-tax loss of 102million euros last season, mainly due to a shortfall caused by the pandemic. Meanwhile, Suning also faces financial pressures closer to home, which has made it difficult for the Italian club to continue funding, including a recent crackdown by Chinese authorities on foreign capital outflows.

While the Nanjing-based company managed to repay $ 1.5 billion in debt at the end of last year, its remaining obligations are huge. The group has an additional $ 1.2 billion in bonds maturing this year, more than half of its total debt, according to data from Dealogic.

Zhang Jindong, chairman of Suning, has also pledged shares in his own company to Alibaba in recent months. Such a decision is a mechanism commonly used by Chinese companies and shareholders to obtain funds for refinancing or working capital.

Suning and Inter Milan declined to comment. BC Partners, Fortress and Ares did not immediately respond to requests for comment.

Additional reporting by Edward White in Seoul and Sherry Fei Ju in Beijing

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