Phoenix LXXX: Is there another way out?

[Fugu]

took them long enough

What else did we expect but the more I think about it the more I really want to know who behind that leak?

Why do you think I wanted a stand-alone thread, get the headline right out there by itself.

 

[Gotaf7]

Would the BOG approve this deal? How would they be "made whole"?

 

[Donwood]

Would the BOG approve this deal? How would they be "made whole"?

I think this deal is more like Dig a Hole

 

[NickWIHockey]

there is no way any sane city council would approve that deal. Glendale already forked over 50 million, and that didn't even cover all the losses in those two years. no way are they going to fork over 300 million over 20 years. as others have said hedge funds and investors in general want returns on their investment, buying into the coyotes is like piling up your money dark knight style, setting it on fire, and then dancing around it like a powwow. no reasonable person would want any part of this, which is why all the various attempts have been clowns, shadsters, and jokers. hopefully this is the finale, as for the next title - how about " Was it All Worth it?" I'm a big Queen fan, and that title seems apropo.

 

[Fugu]

Would the BOG approve this deal? How would they be "made whole"?

The NHL needs to get $140 MM back (paid in BK) and they added $30 MM somewhere for ostensibly losses/costs to the league not covered by COG (presumably), hence the $170 MM asking price.

$120 MM (Fortress loan to RSE) + $45 MM (RSE money) = $165 MM

They put themselves on the hook for $85 MM, free of interest and principle repayment presumably for 5 yrs), so they're hardly free and clear of the situation (if this report is accurate).

 

[sipowicz]

Come someone remind us what Balsillie offered for the Coyotes a few years back when he had money.

 

[Phil Parent]

I think that "We're opening envelopes for the arena management deal, and we're willing to give 6 millions." was Glendale putting the ball in the NHL's half of the court, and today's leak which says "Well, RSE has the money to buy the team and keep it in Phoenix IF they manage the arena and get 15 millions a year to do so that will pay back their loan." is the NHL returning said ball toward's Glendale's half. Let's see what they do with it. Maybe they meet in the middle for 10 millions a year and a 15 years guarantee to stay in town.

PKP wouldn't need a loan or anything, but whatever. Why make simple when you can make an unbelievably convoluted mess last longer?

 

[Donwood]

I think that "We're opening envelopes for the arena management deal, and we're willing to give 6 millions." was Glendale putting the ball in the NHL's half of the court, and today's leak which says "Well, RSE has the money to buy the team and keep it in Phoenix IF they manage the arena and get 15 millions a year to do so that will pay back their loan." is the NHL returning said ball toward's Glendale's half. Let's see what they do with it.

Hmm, I'd say Weiers reaction will be "Where's my shotgun"

 

[Donwood]

Casual Fan: Does the Forbes leaked plan even come close to passing reality?

 

[Killion]

They put themselves on the hook for $85 MM, free of interest and principle repayment presumably for 5 yrs), so they're hardly free and clear of the situation (if this report is accurate).

Never mind that the COG cant come with the difference between $6M & app $12M, leaving Fortress to go whistle up a dark alley, I wonder if Gary Bettman would have that kind of latitude in light of the fact that there does appear to be another option for a cash transaction (obviously involving a relocation). The whole thing is convoluted, seems to contain an awful lot that could go wrong, and Murphys Law being what it is, a rather serious roll of the dice.

 

[Confucius]

The NHL needs to get $140 MM back (paid in BK) and they added $30 MM somewhere for ostensibly losses/costs to the league not covered by COG (presumably), hence the $170 MM asking price.

$120 MM (Fortress loan to RSE) + $45 MM (RSE money) = $165 MM

They put themselves on the hook for $85 MM, free of interest and principle repayment presumably for 5 yrs), so they're hardly free and clear of the situation (if this report is accurate).

Wow they are lending 120 million and may not start to get one cent back for 5 years. Some people in this world really do have money to toss away.

 

[Fugu]

Wow they are lending 120 million and may not start to get one cent back for 5 years. Some people in this world really do have money to toss away.

No, you're confusing Fortress (hedge fund) with the NHL. The money comes from three sources:

Fortress loans $120 MM to RSE
NHL loans $85 MM to RSE
RSE puts in $45 MM cash


NHL receives ~$165-170 MM at closing.

 

[Mr McV]

New thread titles for the Coyotes ownership (sale) threads needed for the next 5 years, all may apply.

I think we are much closer to a thread which could be titled "The Flight Of The Phoenix."

 

[madhi19]

Never mind that the COG cant come with the difference between $6M & app $12M, leaving Fortress to go whistle up a dark alley, I wonder if Gary Bettman would have that kind of latitude in light of the fact that there does appear to be another option for a cash transaction (obviously involving a relocation). The whole thing is convoluted, seems to contain an awful lot that could go wrong, and Murphys Law being what it is, a rather serious roll of the dice.

The theory that the NHL was only going through the motion knowing full well where this was heading and only for leverage with PKP is starting to look really solid.

 

[Killion]

Come someone remind us what Balsillie offered for the Coyotes a few years back when he had money.

Cant remember exactly, but $196M seems to ring a bell. In addition to that he was willing to basically gift the COG either $25M or $50M in "transition funds" to help them on their journey with the building, additionally offering to MLSE & I believe the Sabres a negotiated set of indemnification fee's, and also offered the Arena Management Contract & Concessions at Copps to the former. He was also offering to cover somewhere around 33%+ on an app $200M reno, the city & province kicking in the rest.

 

[madhi19]

No, you're confusing Fortress (hedge fund) with the NHL. The money comes from three sources:

Fortress loans $120 MM to RSE
NHL loans $85 MM to RSE
RSE puts in $45 MM cash


NHL receives ~$165-170 MM at closing.

120+45-85=80
Wow that relocation fee look pretty damn good right about now. Say the NHL sank 200 million in this mess by now on the credit line mind you. Likely more but we never really know so let be generous and say it only 200. They can shave 80 millon off that debt now but that mean they have to pay interest on 120 million for five years before RSE start paying them back that 85 million and they would still be 35+ million in the hole. And never mind that you can make yourself whole with expansion it still at least $35 loss.

 

[TheTakedown]

Imagine afyer all this... Phoenix ends up in Kansas city... :p

 

[Major4Boarding]

The NHL needs to get $140 MM back (paid in BK) and they added $30 MM somewhere for ostensibly losses/costs to the league not covered by COG (presumably), hence the $170 MM asking price.

I've always been under the assumption that additional $30M also included the LOC interest. File that under "costs to the league not covered by COG (presumably)".

Is the $85M from the League parking their RS allocation(s)?

Nothing earth shattering found, thus far

Going "in-house"?

Meet J. Gregory Milmoe - Partner

Skadden, Arps, Slate, Meagher, & Flom

Mr. Milmoe has played a leading role in numerous significant restructuring matters including: bankruptcies (CIT, Refco, Interstate Bakeries, Source Interlink, Exodus Communications, Aurora Foods and IGC); exchange offers and workouts (Harrah’s, Realogy, Revlon, FECC, FGIC, Fairfield Manufacturing, Alamosa, Mirant and ITC^DeltaCom); and “stress M&A” (the NHL’s acquisition of the Phoenix Coyotes, Verizon Wireless’ acquisition of NextWave, McKesson’s acquisition of Foxmeyer Corp., Fortress Investment Group’s acquisitions of Pinnacle, Brookdale and NBA, and Dean Foods’ acquisition of assets from Parmalat USA).

Emphasis mine - that's National Benevolent Association - senior care facilities. Brookdale's a client of mine

http://www.skadden.com/professionals/j-gregory-milmoe

More on FIG and Vancouver (Whistler)

Intrawest's corporate owner, New York hedge fund Fortress Investment Group, last fall missed a $524 million payment on a $1.4 billion debt. Since then, the fund has been negotiating with its lenders — reportedly the defunct Lehman Bros. and hedge fund Davidson Kempner.

http://seattletimes.com/html/olympics/2010847020_whistler21.html

 

[Ciao]

Cant remember exactly, but $196M seems to ring a bell. In addition to that he was willing to basically gift the COG either $25M or $50M in "transition funds" to help them on their journey with the building, additionally offering to MLSE & I believe the Sabres a negotiated set of indemnification fee's, and also offered the Arena Management Contract & Concessions at Copps to the former. He was also offering to cover somewhere around 33%+ on an app $200M reno, the city & province kicking in the rest.

In hindsight, maybe the best deal he never made?

Add it all up and that's one heck of a lot of money at the same time that his investment in RIM would have fallen in value.

 

[Killion]

The theory that the NHL was only going through the motion knowing full well where this was heading and only for leverage with PKP is starting to look really solid.

Ya, and if thats what they were playing at, blew up in their faces.

 

[Fugu]

Cant remember exactly, but $196M seems to ring a bell. In addition to that he was willing to basically gift the COG either $25M or $50M in "transition funds" to help them on their journey with the building, additionally offering to MLSE & I believe the Sabres a negotiated set of indemnification fee's, and also offered the Arena Management Contract & Concessions at Copps to the former. He was also offering to cover somewhere around 33%+ on an app $200M reno, the city & province kicking in the rest.

I seem to recall $220 MM, and eventually the $50 MM (sweetened) to COG to side with JB in court.

Edit: $212 MM

It is anticipated that the judge will hold a hearing within several days to establish a sales procedure, which will include authorizing continuance of the selling activity in an effort to attract higher bids. The PSE price is $212.5 million, which provides funds sufficient to pay secured creditors in full (approximately $80 million to SOF Investments, L.P. and $35 million to the NHL) and $97.5 million to unsecured creditors, whereas the owners of the Coyotes would receive nothing for their equity investment, including $206.5 million in preferred and common equity that will not be recovered by Moyes under the current offer.

 

[Confucius]

120+45-85=80
Wow that relocation fee look pretty damn good right about now.

It looks like the league comes out alright, they get their purchase price back and in 5 years they still could recoup their 85 million by reselling the team for 200 million if RSE defaults. I think 6 million per year (5%) can carry the payments on a 120 million dollar loan. Looks like the team is staying. Sorry QC the smurfs will be your team forever

 

[madhi19]

In hindsight, maybe the best deal he never made?

Add it all up and that's one heck of a lot of money at the same time that his investment in RIM would have fallen in value.

The Hamilton Coyotes would be his most profitable business right now. And he would have had to sell part of his shares in RIM at a lot higher price than it worth now to finance the deal. And maybe at the same time he would have sold a bit more to fill his pocket.

 

[madhi19]

It looks like the league comes out alright, they get their purchase price back and in 5 years they still could recoup their 85 million by reselling the team for 200 million if RSE defaults. I think 6 million per year (5%) can carry the payments on a 120 million dollar loan. Looks like the team is staying. Sorry QC the smurfs will be your team forever

Only if RSE default if they flip it and I bet they have a five years out close that allow them to flip it for relocation all the NHL get is $85 million back. The whole matter is moot no way the CoG drop the necessary 12 to 14 million a year.

 

[Alesle]

It looks like the league comes out alright, they get their purchase price back and in 5 years they still could recoup their 85 million by reselling the team for 200 million if RSE defaults. I think 6 million per year (5%) can carry the payments on a 120 million dollar loan. Looks like the team is staying. Sorry QC the smurfs will be your team forever

On a hedge fund loan? Not a chance.