Hicks to Possibly Default on Rangers Loan
by bigskinny on Apr 3, 2009 11:06 AM CDT
55 comments
Evan Grant is reporting that Hicks has attempted to discuss interest payment options with banks involving his Rangers/Stars loans. If Hicks were to default, what does this mean for the financial structure of the team? If the banks take over ownership, what changes would occur?
Interested in the opinions of people with more financial savy than myself.
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the 350 million
is that the soccer club loan, or are these different.
Bring on April 6th!
by NothinG on Apr 3, 2009 11:12 AM CDT reply actions 0 recs
Different loans
The Liverpool loan is with the Bank of Scotland, IIRC.
"I dont care to debate with a troll." - Sharky
by RCCook on Apr 3, 2009 11:28 AM CDT up reply actions 0 recs
and he might default on that too
if they dont sell to the dubai group
"I'm against picketing, but I don't know how to show it." - Mitch Hedberg
by rentz on Apr 3, 2009 1:38 PM CDT up reply actions 0 recs
from the article
Before we go any further, we should probably explain to our British friends that Liverpool Football Club is not among the HSG holdings and neither are any of Hicks’ other business interests
i thought that same thing you did btw
Scout: He was a first-round pick right? Got a huge bonus?
KG: Oh yeah.
Scout: Well, he spent a lot of it on milkshakes.
by knockoutking on Apr 3, 2009 11:29 AM CDT up reply actions 0 recs
Rangers and Stars are under Hicks Sports Group which was used as collateral for the loan Kop Holding recieved to purchase LFC
mormons stole me and held me against my will with Oklahoma beer and 12+ hour work days.
by Jayslick on Apr 3, 2009 11:37 AM CDT up reply actions 0 recs
Hicks didn't possibly default
He did default.
by Adam J. Morris on Apr 3, 2009 11:24 AM CDT reply actions 0 recs
That's default
with a little “d.” He won’t be in Default until next week, apparently. And the capital “D” is the one that matters.
by Back Door Yakker on Apr 3, 2009 2:41 PM CDT up reply actions 0 recs
It depends...
…on the actual collateral securing the loans. Chances are that it would proceed like most other defaults/foreclosure proceedings where the court would appoint a receiver to oversee the operations. Texas is a quick foreclosure state, however, and if the banks do not agree to HSG’s proposal then a bankruptcy would be more likely.
"I would like to extend to you an invitation to the pants party. The...party. With the...with the pants. Party with pants?"
by BrickTamland on Apr 3, 2009 11:24 AM CDT reply actions 0 recs
Interest reserve
The article said there is an interest reserve. Hicks is just trying to tap that reserve to make the interest payments rather than come out of pocket. Normally there has to be some triggering event that will allow access to that reserve (which is technically his money already), but without the documents then there is really no way to tell what those are.
"I would like to extend to you an invitation to the pants party. The...party. With the...with the pants. Party with pants?"
by BrickTamland on Apr 3, 2009 11:26 AM CDT reply actions 0 recs
It's all a negotiation.
If the covenents of the agreement state that the interest reserves may be tapped because of financial instability, then that could become a he said/she said situation. This is what I think is going on here. Hicks can point to the global economy and having reduced cash flows, and the lenders (in total) can point to Hicks’ cash reserves and overall (personal+business holdings) good finacial position. This is where a third party accounting would come to play, unless an agreement can be worked out first.
Hicks is not worth millions/billions because he gets caught short. I think we have seen his positioning on this issue by going to the media and confirming the rumors that he needs additional investors. His PR machine is in full swing, and he landed the first punch, I would say.
"...my balls are really like a veiny flesh color" blueballlefty on Jun 4, 2008 7:44 PM EDT
"you gonna lose your horse. seriously." FX2
Yes we can! November 04, 2008
by Rodney on Apr 3, 2009 11:52 AM CDT up reply actions 0 recs
i dont think going into default
is a negotiation tactic. the bank already has control of the reserve accounts. if they are concerned with HSG’s ability to service their debt, why would they transfer funds from the reserve account if they didn’t have to?
by SteveP on Apr 3, 2009 12:04 PM CDT up reply actions 0 recs
Because
that is what a debt service reserve is for. It not only gives the Borrower a fallback but the bank as well. It’s just basically a “feel good” provision in the loan docunents.
I think what is happening here is that there is a grey area in the triggering language. Due to the size of these loans I have a feeling that there are many different banks with participating interests who have to be involved in the decision making process. Hicks made his play to force the banks to get together and come to a consensus. And yes, sometimes going into default is a tactic. I don’t think it is a good one, but it happens more than you think.
"I would like to extend to you an invitation to the pants party. The...party. With the...with the pants. Party with pants?"
by BrickTamland on Apr 3, 2009 12:56 PM CDT up reply actions 0 recs
Hicks
made his money in the 80’s and 90’s. Everything he’s touched in the last decade has turned to shit (financially speaking).
"A good start would be not giving up 900 runs again." -Jon Daniels
by Randy Richardson on Apr 3, 2009 12:13 PM CDT up reply actions 0 recs
you live by leverage
you die by leverage. btw, i seem to recall the rangers being on the list of overleveraged ball clubs (by mlb rules) that came out earlier in the decade.
by SteveP on Apr 3, 2009 12:18 PM CDT up reply actions 0 recs
I volunteer to be the receiver
at least for the Rangers
by BEW on Apr 3, 2009 11:28 AM CDT reply actions 0 recs
What does this mean for the Rangers?
Bring on April 6th!
by NothinG on Apr 3, 2009 11:30 AM CDT reply actions 0 recs
very little in the short term,
but I would imagine that Hicks will not be the majority owner this time next year. He’s in a financial bind and wants to sell minority stakes in the Rangers and Stars to raise cash, but, in these tough times, who would shell out big money for a minority stake? Seems like he’ll have to sell a majority stake or all of one or both teams. The Rangers (because MLB is stronger than the NHL) are more marketable and liquid.
"A good start would be not giving up 900 runs again." -Jon Daniels
by Randy Richardson on Apr 3, 2009 11:43 AM CDT up reply actions 0 recs
It means
The real owner of the team (corporation) has defaulted on loans that were used to purchase/operate the team(s). Once this happens, it triggers language in the contract that gives new rights to the corporate bond/debt holders. Brick is right, no way to know cause all corporate debt is structured differently. If my company falls below a cash covenant or doesn’t make an interest payment, we would have to file for bankruptcy and liquidate.
The problem with missing that coupon payment is Hicks loses all leverage he had and he is at the banks mercy. Banks aren’t “reasonable” when you default. The frozen credit markets kill the ability to refinance as if it wasn’t hard enough already. Good luck with a default
by corbsclinton on Apr 3, 2009 11:53 AM CDT up reply actions 0 recs
Lending Institutions
I have a feeling that Hicks is using the default as a ploy to get the banks’ attention. Lending institutions are funny about restructuring or modifying debt for loans that are current. Their thinking is that, well, you’re paying then you can obviously afford the terms. Only when a loan is default will a bank look at modifying the terms. Plus, in this credit environment, banks are obviously taking a beating with defaults and losses, so loans of this size that are defaulting will definitely get their attention. Banks are much more flexible these days then in years past. In other words, I seriously doubt that this escalates into a serious default/foreclosure/bankruptcy issue.
"I would like to extend to you an invitation to the pants party. The...party. With the...with the pants. Party with pants?"
by BrickTamland on Apr 3, 2009 12:18 PM CDT up reply actions 0 recs
Interesting
I don’t think it will go into bankruptcy because of the assets. I do think however, when corporate debt that is not in default is trading 60-65 cents on the dollar, something crazy could happen. If one company could obtain 51% of their corporate debt they call all the shots. It might be the cheapest purchase of a franchise we’ve seen since before the Marlins.
by corbsclinton on Apr 3, 2009 12:31 PM CDT up reply actions 0 recs
That seems about right
I don’t think he’s anywhere near close to being bankrupt or forced to give up control of the team, though that’s what many of us would love to hear.
G G G E-flat_______ F F F D__________....
by t ball on Apr 3, 2009 2:49 PM CDT up reply actions 0 recs
re: "that’s what many of us would love to hear."
Assuming we had a cashed-up baseball crazy owner ready to come in and sink crazy money into a team that doesn’t really have the sort of market support to deserve that sort of spending… then, sure.
But Hicks isn’t that bad.
I’d much rather have a crazy rich spender like an Arte Moreno or a Mark Cuban (*~ducks to avoid AJM’s haymaker of anti-Cuban vitriol*~), but all in all I don’t think Hicks is what’s holding this club back.
The 40 Trumps All!!!
I love you, Marcus Lemon.
"I don’t have any respect for anybody on here. Everyone on here is a fucking asshole who thinks they’re god compared to everyone else." -iorange555.
by thedirkatron on Apr 3, 2009 5:54 PM CDT up reply actions 0 recs
Hicks is learning
but he may well have held this team back. I would want nothing to do with Mark Cuban.
Bring on April 6th!
by NothinG on Apr 3, 2009 6:45 PM CDT up reply actions 0 recs
I just don't trust Hicks
to stay the course.
G G G E-flat_______ F F F D__________....
by t ball on Apr 3, 2009 7:19 PM CDT up reply actions 0 recs
From solely a business perspective,
it’s been a pretty spectacular fall from the high-flying Hicks, Muse days of the 90’s.
"A good start would be not giving up 900 runs again." -Jon Daniels
by Randy Richardson on Apr 3, 2009 11:37 AM CDT reply actions 0 recs
win - win
dont go this year
1. you dont have to watch the team stink up the ballpark
2. it could force hicks to sell the team
do your part!
by sam in so cal on Apr 3, 2009 11:38 AM CDT reply actions 0 recs
This could just be a move to renegotiate the terms of the loands
Hicks group could be trying to re-finance the loans, change interest rates, terms, etc.
by mattrpav on Apr 3, 2009 11:46 AM CDT reply actions 0 recs
The crazy thing is
he would have known about this in Dec/Jan when the corp submitted their budget. I very seriously doubt he just chose not to make the coupon payment. Its more likely that he couldn’t. You’ don’t set you budget based on the assumption you will be able to refinance, you set it expecting you can’t so this doesn’t happen.
by corbsclinton on Apr 3, 2009 12:01 PM CDT up reply actions 0 recs
why are you assuming they submitted their budgets
in Dec/Jan?
"He will not coddle them. Nolan Ryan doesn’t coddle." - Jeff Passan
by Dirk Diggler on Apr 3, 2009 1:03 PM CDT up reply actions 0 recs
good point
my point was at the latest he knew this would happen last year and could have budgeted 09 for it.
by corbsclinton on Apr 3, 2009 1:15 PM CDT up reply actions 0 recs
yes, probably
But, lots of things happened that MANY people didn’t forsee in the 3rd/4th quarter of ‘09. I think it’s entirely possible that he never expected to be in this position.
But, from what i know of interest reserves and what not — it’s really going to be about the specific language in the debt covenant. Banks aren’t usually so happy to just bend over and let someone get off like that, but even they need to keep an eye on their bottom line so they may make some concessions that allow Hicks to skirt around this at least until he gets some other “investors.”
"He will not coddle them. Nolan Ryan doesn’t coddle." - Jeff Passan
by Dirk Diggler on Apr 3, 2009 1:34 PM CDT up reply actions 0 recs
*should be '08
"He will not coddle them. Nolan Ryan doesn’t coddle." - Jeff Passan
by Dirk Diggler on Apr 3, 2009 2:17 PM CDT up reply actions 0 recs
David McDavid anyone?
He has always wanted to buy a sports team.
Keith Law on Greg Golson, "He's similiar to Cameron and Hunter in that all three are black."
http://tinyurl.com/ranger-rage
by boomer1 on Apr 3, 2009 12:16 PM CDT reply actions 0 recs
ive always been
more of a rusty wallis guy myself
go here to view my blog: http://dirtfromd.blogspot.com
by studcrackers on Apr 3, 2009 1:16 PM CDT up reply actions 0 recs
Park Place for me
Keith Law on Greg Golson, "He's similiar to Cameron and Hunter in that all three are black."
http://tinyurl.com/ranger-rage
by boomer1 on Apr 3, 2009 1:22 PM CDT up reply actions 0 recs
What can $1500 dollars buy me in ranger stock?
I feel like owning a franchise!
by death of the cool on Apr 3, 2009 12:31 PM CDT reply actions 0 recs
Paypal me,
and I’ll take care of all the arrangements for you.
"...my balls are really like a veiny flesh color" blueballlefty on Jun 4, 2008 7:44 PM EDT
"you gonna lose your horse. seriously." FX2
Yes we can! November 04, 2008
by Rodney on Apr 3, 2009 12:35 PM CDT up reply actions 0 recs
oh man...
get him OUT OF HERE!!!
but only after he pays Sheets for 2 years with a 3rd option year…
"Hang-Dai, Wu...Hang-Fu$&ing-Dai"
by Walter Sobchak on Apr 3, 2009 3:46 PM CDT reply actions 0 recs
aaaand that happened....
I’m not buying the ‘ploy’ arguments… Hicks is in a bit of trouble and I’m sure he won’t be the majority owner by the end of the season…
While I want Hicks gone, the prospect of the team changing hands in this way is a little unsettling. Kind of a ’Dance with the Devil you know" deal, I guess…
Grieve: The Yanks have struggled so far. - Lewin: Yeah, cry me a bag of money.
ElectricOkra.com
by WhipSmart on Apr 3, 2009 4:22 PM CDT reply actions 0 recs
Sure he is in a bit of trouble,
but I’ll go dollars to donuts he retains majority control of the team.
"...my balls are really like a veiny flesh color" blueballlefty on Jun 4, 2008 7:44 PM EDT
"you gonna lose your horse. seriously." FX2
Yes we can! November 04, 2008
by Rodney on Apr 3, 2009 4:37 PM CDT up reply actions 0 recs
yep
The Rangers are likely his most profitable venture at the moment, he’ll do whatever he has to to hold onto them I imagine.
"He will not coddle them. Nolan Ryan doesn’t coddle." - Jeff Passan
by Dirk Diggler on Apr 3, 2009 5:23 PM CDT up reply actions 0 recs
At least now we know why
JD couldnt sign juan cruz.
How bout a Smoak and a pancake?
by rchawk12 on Apr 3, 2009 5:40 PM CDT reply actions 0 recs
he could have signed Cruz
we were going to sign Sheets to 2 years 20 million.
i don’t think 1 year worth a few million is a deal breaker
Bring on April 6th!
by NothinG on Apr 3, 2009 6:47 PM CDT up reply actions 0 recs
As much as it would hurt the Rangers in the short term
Hicks defaulting and losing the Rangers would be a wonderful thing. It’s sad to think “anyone is better than who we have now”, but I sincerely believe any rich jackass this side of Donald Sterling would be better than Hicks. He’s insulted the fans on more occasions than I can count and doesn’t deserve the weary yet ever-optimistic fanbase that his team has.
by GhostofGaryHogeboom on Apr 3, 2009 5:55 PM CDT reply actions 0 recs
Hicks hyperbole has gotten tiresome
I'm Matt mutha-effing Bush, bitches, and mutha-eff East County.
"I'm as passionate and knowlegeable as any fan out there." Josey Wales
by Brian Thomas on Apr 3, 2009 8:31 PM CDT up reply actions 0 recs
Indubitably.
The 40 Trumps All!!!
I love you, Marcus Lemon.
"I don’t have any respect for anybody on here. Everyone on here is a fucking asshole who thinks they’re god compared to everyone else." -iorange555.
by thedirkatron on Apr 3, 2009 9:13 PM CDT up reply actions 0 recs
Triple points for the old old school word score
Note to self: work indutitably back into day-to-day vernacular, fronting like you’ve been using it all along…
I'm Matt mutha-effing Bush, bitches, and mutha-eff East County.
"I'm as passionate and knowlegeable as any fan out there." Josey Wales
by Brian Thomas on Apr 4, 2009 12:10 AM CDT up reply actions 0 recs
I'm not sure...
that a major league baseball team can be acquired by a bank without approval of the rest of the owners. In that case, the League could either decide to buy the Rangers (like they did the Nats) until they find an owner or could decide to contract the team.
by Redcaps on Apr 3, 2009 11:01 PM CDT reply actions 0 recs
Somehow
The federal government is going to end up owning the Rangers. I can feel it.
by Black Francis on Apr 4, 2009 1:32 PM CDT reply actions 0 recs
Hell the US gov't already sponsors the richest footy club on earth....
anything is possible
although im still convinced RBS and the UK gov’t end up owning the Rangers and Stars when Hicks cant pay his LFC loan which HSG is the collateral for. either way would be interesting
mormons stole me and held me against my will with Oklahoma beer and 12+ hour work days.
by Jayslick on Apr 4, 2009 5:45 PM CDT up reply actions 0 recs
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