SBD/Issue 138/Franchises

Tom Hicks Looking To Renegotiate Stars, Rangers' Debt

Hicks' Company Has Stopped Making
Interest-Only Payments On Loans
Stars and MLB Rangers Owner Tom Hicks Friday confirmed that his sports holding company, Hicks Sports Group (HSG), has "stopped making interest-only payments" on $525M in loans while it "renegotiates the teams' debt with lenders," according to Gary Jacobson of the DALLAS MORNING NEWS. Hicks said that the negotiations, which have been "going on for a 'couple weeks,' are taking longer than normal because of the frozen credit markets." Hicks: "I've committed to supporting the operations of the two teams for as long as necessary. This is a nonevent for the teams, fans, sponsors and vendors." Hicks noted that he is the largest lender to HSG, and that he "has personally funded some of its interest payments." But Hicks added, "In these times, I'm not willing to do that anymore." Hicks said he was "not yet" in default on the sports loans. Hicks said that HSG is "not asking for more money," but instead is "asking for changes in its lending agreement as well as full access to reserve accounts and a revolving credit line." He said that he is "negotiating with 40 lenders and needs the agreement of just over half." The debt in question is "separate from Hicks' other holdings," including his 50% stake in EPL club Liverpool. Hicks said his personal finances are "fine," but added, "I'm going through what everybody else is going through." Nonetheless, Jacobson noted the situation "illustrates that wealthy team owners are not immune from the tough economy." Smith College sports economist Andrew Zimbalist: "Those owners who have more exposure to the financial markets, which Hicks obviously has, are going to be more impacted" (DALLAS MORNING NEWS, 4/4).

NO CAUSE FOR CONCERN: Hicks said, "We're doing this to get everybody's attention so they'll make a decision and cooperate with us. This is really between me and the banks and the lenders to HSG" (FT. WORTH STAR-TELEGRAM, 4/4). Hicks in an e-mail also said, "There is no possibility of banks owning the teams" (STAR-TELEGRAM.com, 4/3). In addition, the NHL said that it is "not worried about the future" of the Stars. NHL Deputy Commissioner Bill Daly in an e-mail said, "We have no concerns about the Stars' ability to carry on." Daly indicated that the NHL is "not helping Hicks find new investors for the Stars" (GLOBE & MAIL, 4/4). Meanwhile, Hicks did confirm that he is "seeking buyers for a minority stake" in both the Stars and Rangers. Hicks: "We continue to interview prospective partners for the team, and we are optimistic because these are two strong long-term investments for the right people" (FINALTERNATIVES.com, 4/3). Hicks, who owns 95% of both teams, last week said that he was willing to let prospective partners purchase up to 49% of each club. Hicks Friday said, "I'm bringing in minority partners, so I can pay off the loans. I wouldn't normally do that. In this particular environment, that's what we should do" (AP, 4/4).

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