Hicks May Sell MLB’s Rangers Following Loan Defaults 29/05/2009 |
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Billionaire Tom Hicks may sell a majority stake in the Texas Rangers, almost two months after his holding company missed interest payments on $525 million in loans related to the Major League Baseball team and hockey’s Dallas Stars.
Hicks Sports Group, which owns the baseball and hockey teams as well as the English Premier League’s Liverpool Football Club, said that Hicks has hired consultants led by former Goldman Sachs Group Inc. banker Joseph Ravitch to identify potential investors for the club, working jointly with Merrill Lynch & Co.
“My family and I want very much to stay involved with the club but we understand that we have to be open to solutions that may include partners who own a controlling interest in the Rangers,” the 63-year-old Hicks said in an e-mailed statement. “That’s not our preference, but there are some potential buyers who won’t consider having only a minority interest.”
Hicks Sports Group in April missed interest payments on a $350 million term loan with an interest rate of 2.5 percentage points above the London interbank offered rate, or Libor; a $100 million so-called second-lien loan, with an interest rate of 5.5 percentage points plus Libor; and a $75 million revolving bank loan that pays 2 percentage points over Libor.
The company described the situation as a “business dispute” in an e-mailed statement at the time and said it withheld payments “as part of negotiations” over the terms and covenants of the loans.
Global Credit Crisis
“Like so many other companies and institutions, HSG has been impacted by a global credit crisis which no one could have anticipated,” said Hicks, 63, in the April statement. “The company is not asking for additional money; it is only asking for full access to the interest reserve account and revolving credit line as well as some amendments in the debt covenants.”
The loans were arranged by J.P. Morgan Chase & Co. and Barclays PLC in 2006 and mature in 2010 and 2011, according to Bloomberg data. The debt is related to the Rangers and Stars and not Liverpool FC, the company said.
In March, Forbes estimated Hick’s net worth at $1 billion. Later that month, Hicks told MLB.com that he had hired Merrill Lynch to explore selling as much as 49 percent of the Rangers. The Web site also said Hicks was seeking to sell a minority stake in the Stars.
Hicks bought the Rangers in January 1998 for $250 million from a group headed by former U.S. President George W. Bush, and purchased the Stars for $84 million in February 1996.
Hicks and Montreal Canadiens owner George Gillett bought Liverpool for 174 million pounds ($258 million) in February 2007 and assumed 45 million pounds in debt. Canadiens President Pierre Boivin said in a statement last month that Gillett was considering selling his stake in both the soccer and hockey teams. Hicks said in February he wasn’t selling his stake in the soccer team.
(Source: Bloomberg)
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