SBJ/July 6-12, 1998/This Weeks News

Perot, Hicks to sell $180 million in arena notes

Teams’ owners plan to raise $75 million more than their initial commitment

Tom Hicks and Ross Perot Jr. are selling $180 million of notes to private investors to fund their portion of the new Dallas sports arena.

Perot, who owns the Dallas Mavericks, and Hicks, who owns the Dallas Stars, are part of a private group that agreed to pay $105 million of the $230 million arena – meaning they are seeking $75 million more than their commitment. Hicks and Perot, whose teams will play in the new arena, are the key members of the consortium issuing the notes.

The extra money will be used for legal fees, infrastructure needs such as roads and utilities, debt service and a reserve fund, said Jonas Woods, a vice president of Hillwood Development, Ross Perot’s company.

The arena is being developed as a public-private partnership, with public taxes paying for $125 million.

The senior secured notes are being offered to private investors. Chase Manhattan Corp. and NationsBank Corp. are marketing the notes.

The funding is the latest step in building the arena in a hoped-for record time of 29 months. Early last month, the consortium chose architect David Schwartz.

The teams and their financial representatives would not comment or did not respond to questions on why they chose a private placement instead of what could have been a cheaper bond sale. Woods, the Hillwood vice president, referred comment to Chase Manhattan, which wouldn’t comment.

With interest rates low and bond investors increasingly comfortable with the contractually obligated income generated by new arenas, a bond sale could have been a less expensive route. Also, many of the recent arena deals have gotten bond insurance, which brings an instant AAA rating.

Bond sales, however, necessitate disclosing critical financial information, something the Dallas arena group may not have been willing to do. Also, bond insurance can be pricey, and much of the contractually obligated income that bond investors require, such as title sponsorship, may not have been negotiated yet.

Return to top
Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug