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 , 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 recognises 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 US$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.

  - Bloomberg