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HSG Claims Crane Made Higher Offer Than Greenberg For Rangers
Published June 14, 2010
|Houston Businessman Reportedly
Offered Highest Bid For Rangers
The nearly six-month conflict involving creditors of Hicks Sports Group (HSG), who claim the company's proposed sale of the Rangers is undervalued, has been characterized as being between the lenders and HSG. But it was HSG's own counsel that told MLB that prospective owner Chuck Greenberg's offer was inferior to one from Houston businessman Jim Crane. "It is unlikely we can recommend that we proceed forward with Greenberg based on where we are with their proposal and assuming we can proceed forward with Crane," Glenn West, a partner with HSG counsel Weil Gotshal, wrote on Jan. 16 to Latham Watkins, the creditors' counsel. "Crane thus is at least $13 million and perhaps more than $20 million ahead of Greenberg with a lot more certainty of closing, assuming of course he can get MLB approval." That day, MLB under its rights in its agreement with the Rangers, reached since the team had defaulted on its debt in March '09, took over the sale process and executed the Greenberg agreement. MLB Senior VP & General Counsel Tom Ostertag in an e-mail to West on Dec. 29, 2009, which was included in the bankruptcy court filings, said because Greenberg had been preliminarily chosen by HSG on Dec. 15, HSG could not entertain other offers. "We believe the intent of [our agreement with the Rangers] is clear that negotiation toward a definitive purchase agreement is to be with the winning bidder only," Ostertag wrote. "None of the losing bidders should be part of any negotiation at this point." After receiving Ostertag's reply, West wrote the creditors on New Year's Eve '09, "Basically, the response from the MLB was to prohibit us from negotiating with anyone other than Greenberg. Their intent seems to be to lock us into Greenberg even though Crane now has a clearly superior economic deal -- and may always have had based on Greenberg's current position. We need help here. Unless the lenders weigh in, we are going to be stuck negotiating a deal that is clearly worse than Crane's." Crane sent a letter to MLB on April 2 reaffirming his desire to buy the team and increased his offer. The letter was included as an exhibit in the creditors' court filing last week (Daniel Kaplan, SportsBusiness Journal). West wrote to Ostertag, "It appears Greenberg is using your position to simply refuse to negotiate in good faith; and the result will be a bad one for the team and our lenders (whose consent is absolutely required, just like yours, for whatever is ultimately done here)" (N.Y. TIMES, 6/12).
BREAKUP FEE: Documents filed as part of the Rangers' bankruptcy indicate that Greenberg and Nolan Ryan "stand to earn a $10 million breakup fee if they do not buy the club." Sources said that HSG creditors "would surely contest the breakup fee ... pointing out that the two were required to put down just $1.5 million on a $575 million deal" (SPORTSBUSINESS JOURNAL, 6/14 issue).