Dewey Ranch Hockey, LLC and its affiliates Arena Management Group, LLC, Coyotes Holdings, LLC and Coyotes Hockey, LLC (collectively “Coyotes”), owner of the National Hockey League (NHL) team the Phoenix Coyotes filed for Chapter 11 reorganization to implement a court-approved sale of the team under the federal bankruptcy code. The filing included a proposed sale of the franchise to PSE Sports & Entertainment, LP, a Delaware limited partnership (“PSE”), which would move the franchise to southern Ontario, Canada.
“Extensive efforts have been undertaken to sell the team, or attract additional investors, who would keep the team in Glendale,” said Coyotes' Chief Executive Officer and Managing Member Jerry Moyes.
“Creating a process under the supervision of a judge assures that anyone wishing to purchase the team will have the opportunity to bid. Likewise, the City of Glendale, which has been very cooperative with efforts to keep the team in Glendale, will be able to provide potential buyers assurances of the City’s willingness to offer incentives to keep the team as a tenant in the Jobing.com arena, the lease for which is subject to rejection in bankruptcy,” Moyes stated. “The process assures that the identities of the new owner and the team’s location will be known by June 30, 2009, thus enabling the NHL to include the team in its 2009-10 schedule.”
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.
“As Managing Member of the Coyotes, I have a duty to seek a transaction that will return the most in sale proceeds to the secured and unsecured creditors,” Moyes said. “No other proposal to acquire the team provided nearly as much payment to the creditors as that offered by PSE, with the understanding that the procedure is in place for other parties to offer more, particularly if the City of Glendale provides financial incentives to keep the team in Glendale. Overbids must exceed the PSE proposal by $5 million and must be fully funded at closing without a financing contingency.”
The filing coincides with Blackberry billionaire Jim Balsillie offer to purchase the club and move it to Hamilton, Ontario, Canada, just outside of Toronto.
Jim Balsillie tabled an offer today to purchase the Phoenix Coyotes, following the team's bankruptcy filing. The offer to purchase the team for $212.5 million (U.S.) is conditional on relocation to Southern Ontario, to become the seventh NHL franchise in Canada.
"The current team ownership asked that I table an offer to purchase the Coyotes and significant discussions resulted in an offer that is in the best interests of the franchise, the NHL, and the great hockey fans of Canada and Southern Ontario," Mr. Balsillie said.
"I am excited to move closer to bringing an NHL franchise to what I believe is one of the best un-served hockey markets in the world, Southern Ontario. A market with devoted hockey fans, a rich hockey history, a growing and diversified economy and a population of more than 7 million people," he said.
At the request of the Coyotes franchise owner, Mr. Balsillie has also agreed to post debtor-in-possession (DIP) financing of $17 million (U.S.). Debtor in possession financing is bridge financing provided when a company is in an insolvency proceeding which allows the company to continue to operate through the proceeding in advance of a restructuring or sale.
Prior to a final decision being reached on the proposed sale, he called for Canadian fans who want to see a seventh NHL franchise in Canada to make their voices heard.
"It's particularly important for Canadian fans to demonstrate the kind of hockey market we have and the passion we share for this game. We want those Canadian voices who want a seventh NHL team in Canada to be heard throughout the North American NHL market. Canadian fans can log on to www.makeitseven.ca to add their voices to the call for an NHL team in Southern Ontario" Mr. Balsillie said.
Balsillie has tried more than once to purchase a club and move it to Hamilton. In 2006 he tried unsuccessfully to purchase the Penguins, and the Predators in 2007.
OTHER NEWS ACROSS THE BUSINESS OF SPORTS NETWORK