Judge Approves Sale Of Coyotes

((HT: TSN/

Judge Redfield T. Baum agreed to sign the sale order to the NHL on Monday after lawyers made minor modifications to the deal.

None of the changes significantly altered the NHL's agreement to pay about US$140 million to buy the team from owner Jerry Moyes.

The only party who didn't join in the agreement is former coach Wayne Gretzky, who owned a small portion of the team. However, Gretzky did not file a formal objection with the court.

As part of the deal, the league will reduce the amount of money it says Moyes owes it from $30 million to $15 million.

The sale leaves about $11.6 million that could be divided among Moyes, Gretzky and Glendale, but that figure is expected to drop by a few million when attorneys' fees and other administrative costs are subtracted. It is expected to take several months to determine the exact payouts.

Under the purchase agreement, all the unsecured creditors would be paid except Moyes, Gretzky and Glendale ((jobing.com Arena is pictured, thanks Getty Images)). The largest secured creditor, SOF Investments, will get all of its $80 million, either in cash or over time in an agreement with the NHL.

Those of us at OSG HQ would like to remind everyone that both Ice Edge and the Argos group of Cynamon and Sokolowski are interested in playing by The Bettman's rules for now- and could, probably, pick up the Dogs for a song.

Whoever that group is: Look for them to move the franchise after a few years straight of empty seats in the middle of the desert.

Dell Sides With Reinsdorf In Coyotes Bid

((HT: GlobeSports/Shoalts))

Like we said, the hearing Tuesday in US Bankruptcy Court, would be a doozy.

It was, for an intersting reason.

Just when you thought the players had aligned with their appropriate dance partners, it has all changed. The Balsillie camp, which thought they had the best finaincial package for all the debtors wanting cash with Coyotes owner Jerry Moyes, lost Michael Dell.

Adam Klein, the main lawyer for Jerry Reinsdorf ((pictured, thanks Jonathan Daniel/Getty)), was ready to pack up all their toys and leave. But then Klein and Reinsdorf got an ally in Dell/SOF Investments.

Dell's lawyer, Steven Abramowitz, said Reinsdorf agreed “to a substantial pay down and rollover of the remainder of the debt.” So much for the $80-million being paid in full by Balsillie.

"If Reinsdorf can now reach an agreement with Glendale on a new arena lease, Abramowitz said, “we will support his bid.” "

The Balsillie camp, understandably, had to put something of a positive spin on everything:

Cue the attorney...Richard Rodier...

“It’s like I said a long time ago, bankruptcy is a funny process,” he said. “There are ups, downs and sideways. You can’t get too hepped up about the highs and too down about the lows.”

But, Rodier admitted, “it’s a theoretical possibility” that Balsillie could be knocked out of the bidding on Sept. 2 if the judge sides with the NHL. “But I don’t want to speculate on that.”

So, what about Daryl Jones, Ice Edge, and their unfinished bid...?

“We feel great about both our financing and negotiations with the City of Glendale,” Jones said in an e-mail message.

Sounds concrete... bring on September 2nd...

That's the date in Baum's datebook where everyone decides whether or not Jim Balsillie is fit to be an owner once and for all...

That is, until the appeals process...

Balsillie Bid "Highest and Best," Auction September 10th

((HT: GlobeSports/Shoalts))

Jim Balsillie’s $212.5-million (all currency U.S.) bid for the Phoenix Coyotes survived more attacks from the National Hockey League and the city of Glendale Monday thanks to a U.S. bankruptcy court judge who declared it the “highest and best” of the three offers for the team.

Judge Redfield T. Baum also kept in the game a bid from a group of Canadian and American businessmen known as Ice Edge Holdings LLC when he agreed to postpone the auction sale for bidders who want to keep the Coyotes in suburban Glendale, Ariz., from Wednesday to Sept. 10.

Both of the local Glendale bidders – Ice Edge and Chicago White Sox owner Jerry Reinsdorf – wanted more time to negotiate a new arena lease with the city and new deals with creditors. The sale will now be held on the same day as an auction for Mr. Balsillie and any other bidder seeking to relocate the team if neither of the Glendale bids are accepted. His offer is conditional on moving the team to Hamilton.

The judge said he will rule on what will happen with the relocation auction by Wednesday, musing in the hearing that he might hold one auction for all bids. The judge also recognized the legal fight over the team will probably get even nastier, saying lawsuits are likely to follow from the losing parties on Sept. 10.

The NHL formally rejected Mr. Balsillie as an owner last week but could be overruled by the court.

“We … note that the judge acknowledged the fact that Jim Balsillie’s bid is ‘the highest and best’ bid for the Phoenix Coyotes,” said Bill Walker, a spokesman for Mr. Balsillie. “We agree. That is the reason why the court is not ruling out the relocation auction despite the NHL’s request for it to do so.”

The NHL, which earlier in the day charged that Mr. Balsillie, the co-CEO of Research In Motion Ltd., “lacks the good character and integrity required” by the league’s constitution and bylaws, declined to comment. NHL deputy commissioner Bill Daly said there would be no comment until Judge Baum rules on the relocation auction.

Both the Reinsdorf bid ($148-million) and Ice Edge’s ($150-million) involve relatively little cash for the creditors and are conditional on negotiating new deals with the team’s creditors and a new arena lease with Glendale.

Mr. Balsillie received another boost yesterday when a lawyer for the Coyotes’ largest creditor said it was only interested in being paid in full and in cash. A lawyer for SOF Investments, a fund owned by computer tycoon Michael Dell, told Judge Baum that only Mr. Balsillie’s bid would do that, although the fund had issues with all three bids. Lawyers for SOF Investments reserved the right to agree to any of the bids if negotiations with either Mr. Reindsorf or Ice Edge produced an acceptable result.

The City of Glendale and the NHL started throwing punches even before the emergency hearing began. The city asked the court to find Coyotes owner Jerry Moyes and his lawyers in contempt of court for disclosing confidential information and the NHL launched its attack on Mr. Balsillie in court filings.

However, shortly after the hearing began, Judge Baum waved off the demand to find Mr. Moyes and his lawyers in contempt. He later called on the lawyers for all parties to meet and discuss the situation.

As a result of Mr. Moyes revealing some of the concessions the Reinsdorf group is seeking from the city – a demand for subsidies of $23-million a year from 2010 until 2014 and $15-million a year after that plus an escape and relocation clause – lawyers for Glendale claimed that attempts to negotiate a lease with Mr. Reinsdorf and Ice Edge were badly damaged.

The declaration said Mr. Reinsdorf threatened to withdraw his bid after he learned that the concessions he was demanding from Glendale city officials were revealed in a court filing last Friday by Mr. Moyes and his lawyers.

“Glendale is absolutely outraged that Moyes and the Jennings Strouss firm would intentionally disclose confidential information produced in discovery and willfully violate the court’s confidentiality order,” the document said.

Glendale city manager Ed Beasley, who is leading the negotiations with Mr. Reinsdorf, said in a declaration filed with the court that efforts to agree on a new lease were “severely compromised.”

The Moyes filing said the $23-million subsidy was to be raised by creating a special district around the Jobing.com Arena and the neighbouring Westgate City Center in Glendale. There would be “voluntary” surcharges to retail sales in the district, as high as 11.5 per cent, although no details were given as to how this would be accomplished.

The Arizona Cardinals made it known on the weekend they are not happy with the idea of the surcharges. The NFL team’s stadium would be in the special district and team president Michael Bidwell was quoted in local media reports as saying it was not fair that Cardinal fans should have to pay for the Coyotes’ problems.

In addition, if the surcharges failed to raise the required amount, the city itself would have to pay the Coyotes. The Coyotes would also get the right to move after 2014 if the team operated at a net cash loss (it lost more than $60-million in the 2008-09 season) and the city refused to pay it $15-million per year. The document also said Glendale officials had so far refused to agree to the demands.

Daryl Jones, one of the leaders of the Ice Edge group, said they are not seeking the same kind of subsidies from Glendale, nor do they want an escape clause to let them move the team.

“We aren’t looking for concessions,” Mr. Jones said in an e-mail message. “We are looking for an enhanced long-term partnership with the city. We have also not contemplated an escape clause.”

Coyotes Auction Unlikely Wednesday

((HT: GlobeSports/Shoalts, Waldie))

On a day that saw Phoenix Coyotes owner Jerry Moyes and would-be buyer Jim Balsillie ((pictured, thanks GlobeSports file)) intensify their legal war with the NHL and a third – albeit incomplete – bid for the team finally emerge, the only near-certainty at the end of a blizzard of court filings is that the auction sale planned for next Wednesday is unlikely to proceed.

Almost all of the parties involved asked the U.S. Bankruptcy Court to either postpone or cancel the sale, which is restricted to bidders who want to keep the Coyotes in the Phoenix suburb of Glendale. By late last night, the only major party which did not make the request was the bidding group led by Chicago White Sox and Chicago Bulls owner Jerry Reinsdorf.

A hearing is tentatively scheduled for Monday afternoon in Phoenix for Judge Redfield T. Baum to hear arguments about delaying or even cancelling Wednesday’s sale.

Ice Edge Holdings LLC, a group of Canadian and American businessmen, filed a $150-million (all currency U.S.) offer for the Coyotes with the court yesterday and it included a request to postpone the sale until September. The group said it needs time to complete its due diligence, finish lease negotiations with Glendale, convince the Coyotes’ major creditors to accept new terms and to find more investors.

Ice Edge and Reinsdorf, whose bid is for $148-million, are the only bidders who promise to keep the team in Glendale. Balsillie, the only other bidder, wants to move the Coyotes to Hamilton. The Ice Edge bid was quickly followed last night by filings from Moyes and Balsillie that said both the Reinsdorf and Ice Edge bids failed to meet the qualifications demanded by the court and should be rejected. They want the court to proceed directly to the auction planned for Sept. 10, which is to consider bids for relocating the team if the Glendale bids were not accepted.

One of the oddest filings during the busy day was one from the NHL which appeared to object in part to Reinsdorf's bid, one which the league has been championing for months. In its filing, the league objected to proposed settlement amounts for various contracts owed to NHL and people or companies connected to it.

However, the filing was made to ensure the league's rights were protected because negotiations with Reinsdorf have not been completed.

Balsillie, the co-CEO of Research In Motion, also filed a new version of his $212.5-million bid. The key difference in this one is that a provision that would have paid Coyotes head coach and minority owner Wayne Gretzky as much as $22.5-million was removed. Instead, all of the purchase price will be in cash with no designated amounts.

Like Moyes, Balsillie charged that neither Reinsdorf nor Ice Edge offered any cash for the creditors and their bids should not be considered by the court. His filing also accused NHL commissioner Gary Bettman of having a personal bias against him and that the league governors’ rejection of him as a potential owner was a sham.

“It is clear to Mr. Balsillie that commissioner Bettman and a number of the governors have a personal grudge against Mr. Balsillie,” the filing said, “and that the root of the problem is Mr. Balsillie making prudent business decisions, in each case within his contract terms, instead of spending vast amounts of money for an unprofitable team with no right to apply for relocation.”

The court document went on to say Balsillie believes his rejection by the NHL was connected to a last-minute dispute in 2006 over his right to move the Pittsburgh Penguins that caused him to withdraw an offer for the team.

As for the league approving Reinsdorf as an owner and not him, Balsillie’s filing said, “It is telling that the NHL conditionally approved the Reinsdorf transfer application even though the individuals comprising the Reinsdorf group have not been determined. It appears to PSE [the company Balsillie formed to handle the sale] that the outcome of the NHL’s deliberations was scripted to advance the NHL’s objectives in relation to matters before the court.”

Daryl Jones, one of the leaders of Ice Edge, said his group’s offer differs from Reinsdorf’s in three key areas. Ice Edge is offering to modify Gretzky’s employment contract where as Reinsdorf has excluded Gretzky’s contract from his bid. Ice Edge will also pay off more secured creditors – including Moyes – Jones said. And the group has pledged to cover the costs of winding down the Coyotes once the Chapter 11 process is over. While Jones declined to provide an estimate for how much that could cost, it typically runs into the millions.

“This is another positive step forward for us,” he said. “Our constraint has always been time and with this we’re sending a real signal to the court that we’re serious.”

Another condition of the Ice Edge offer is that Glendale agrees to allow up to five regular-season and additional NHL playoff games to be played elsewhere. The group hopes to receive NHL approval to play those games in Saskatoon.

The Coyotes’ largest creditor, meanwhile, broke its silence yesterday. SOF Investments Ltd., a fund owned by computer tycoon Michael Dell and that is owed at least $80-million by the Coyotes, also filed an objection to Wednesday’s sale.

Lawyers for SOF joined Moyes and Balsillie in saying neither bid consists of any cash but only the assumption of debt and a condition that new deals be worked out with some creditors while others would be left out in the cold. Both Moyes and Balsillie pointed out neither bid put up a $10-million deposit by yesterday, which was part of the court’s terms.

The SOF filing noted that only Balsillie’s offer would pay the investment fund in full. However, SOF also reserved its right to accept a bid from Reinsdorf or Ice Edge if an acceptable deal could be made.

Also joining the fray was AEG, the company owned by Los Angeles Kings owner Philip Anschutz, and the Goldwater Institute, a conservative watchdog group that may sue Glendale if it feels too much money is given away in lease concessions.

AEG, which has the contract to manage Jobing.com Arena, objected to Wednesday’s sale because of a dispute with Reinsdorf over how much money AEG is owed. The Goldwater Institute, which lost a bid in another court yesterday to make public all of the arena lease negotiations, asked the judge to keep the interests of Glendale taxpayers in mind concerning the Reinsdorf and Ice Edge bids.

Coyotes Largest Creditor Backs Balsillie

((HT: The Star))

The single-largest secured creditor in the Phoenix Coyotes' bankruptcy case spoke up yesterday and gave its qualified support to Canadian billionaire Jim Balsillie's $212.5 million (all figures U.S.) bid.

But, at the same time, SOF Investments seems resigned to the possibility the Coyotes would play hockey in Glendale next season and urged the team to start marketing itself as if it were.

SOF Investments – which lent $75 million to Jerry Moyes to keep the team afloat – is the second secured creditor behind the NHL, which is the primary secured creditor.

It believes Balsillie's bid "would result in substantial recovery of the amounts owed to the debtors' creditors, including SOF, which would be paid in full in cash," SOF said in court papers.

As a bit of a sidebar, here's an interview Balsillie did with Bob McCown of the Fan 590 in Toronto back on Wednesday. He seems fairly confident of his position in Phoenix with the bankruptcy proceedings.

McCown and Balsillie are joined by Bruce Arthur by clicking in black...

Dog Days In Glendale...

Following up on the Scott Burnside piece on the creative financing the Phoenix Coyotes ((pictured, thanks Deirdre Hamill/Arizona Republic)) are using to stay, ahem, afloat these days David Shoalts in the Globe and Mail has come across some really disturbing stuff.

Shoalts has some documents that lay out what's left of the team's money- most of which is tied up in something called "SOF Investments LP." SOF is a subsidiary of the MSD Capital hedge fund which is controlled by Michael Dell.

Yes that "Dell..."

The team's collateral covers, according to the article, close to US$80-million toward MSD and SOF. Got all that...?

We're not done...

Remember we talked about the team and the city butting heads over the screwy lease agreement the Coyotes have with the city...? The only way the team can break the lease ((if it were to get to that point)) would be to declare bankruptcy. Then the Dogs could relocate to Kansas City, Hamilton, or any other possible league-approved suitor's home base.

Are you paying attention Jim Balsillie...?
Of course you are... you wouldn't be the shrewd businessman you are if you weren't.

The key paragraphs from the Shoalts piece are at the bottom...

"The Coyotes began borrowing money from SOF in 2003, and increased its collateral in succeeding years, according to documents obtained by The Globe and Mail. According to a Uniform Commercial Code financing statement filed with the state of Delaware, the Coyotes pledged everything from ticket revenue, broadcast revenue, concessions, future NHL expansion payments, player contracts, insurance policies, arena revenue and merchandise sales as collateral.

A series of financing statements were filed over the years as the Coyotes continued their relationship with SOF. On January 17, 2007, another document contained a single sentence: "The collateral consists of all assets of the debtor."

The timing of that document suggests the Coyotes increased their loan from SOF in order to pay off one to another New York hedge fund, Fortress Credit Opportunities LP.

In a statement filed on November 6, 2008, which extended the loan from SOF until Dec. 29, 2013, almost all of the Coyotes' assets were listed as collateral."

What it appears Jerry Moyes has done is mortgage his future to fund his present...
We think the hourglass is running out of desert sand...