Creditors Find Tom Hicks' Sports Holding Company HSG In Default
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Hicks' Default Could Dislodge
Stars, Rangers From His Control |
Creditors to Stars and MLB Rangers Owner Tom Hicks' sports holding company Hicks Sports Group (HSG) have "declared the company in default, a measure that could eventually dislodge" the teams from his control, according to Matthew Futterman of the WALL STREET JOURNAL. The default notice is the "strongest sign yet of the economic perils awaiting the country's professional sports leagues." A group of "40 financial institutions and other investors hold $525[M]" of HSG's debt. N.Y.-based sports-financing group Galatioto Sports Partners "holds the largest portion, having lent nearly" $100M to HSG. Hicks "missed a $10[M] quarterly interest payment on March 31, triggering the default notice." A source said that the teams are "unable to fund both their operating expenses and debt service," and added that Hicks has "declined to continue making up the difference out of his own pocket." The default notice "begins a process that could put the banks in control of the teams." That "won't happen for at least 180 days, however, as lenders have agreed to [NHL] provisions that prevent immediate foreclosure." MLB's rules for "such situations are more fluid, though if [HSG] can't satisfy lenders, the lenders can eventually force an MLB-sanctioned sale of the Rangers." Hicks can "fix the situation, and remain in control of the teams, by paying off his current debt or by reaching a new deal with his lenders, which he is trying to do." But sources said that relations between the HSG lenders and the NHL have "grown increasingly testy of late, with the NHL threatening to do all it could to block a forced sale of the Stars." Meanwhile, Hicks is "trying to fashion a deal of his own, by selling a minority stake in the Rangers and Stars." Hicks said, "I'm confident that I'll be able to reach agreement with 51% of the lenders because I will be able to fund all the cash needs of the two teams during the period that I'm bringing in new partners, which will help us to drastically reduce if not eliminate HSG's debt" (WALL STREET JOURNAL, 4/14).
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