Friday, June 11, 2010

Creditors in court brief say price for Texas Rangers could have been higher

6/11/10, NY Times: "Since the Texas Rangers agreed to a sale to a group led by Chuck Greenberg and Nolan Ryan for $575 million earlier this year,
  • creditors to the team’s parent company have insisted that other bidders would have paid more.

In a brief filed Friday in United States bankruptcy court in Fort Worth, Tex., the creditors cited correspondence from a lawyer for the H.S.G. Sports Group, which is selling the team, saying that a Houston businessman named

  • Jim Crane offered a much better deal than Ryan and Greenberg.

Glenn West, legal counsel to H.S.G., wrote last December to a lawyer for J. P. Morgan, the creditors’ representative, saying, “Crane now has a clearly superior economic deal — and may always have had based on Greenberg’s current position.”

But Major League Baseball told H.S.G. that it had “our permission to negotiate only with the Greenberg group,” the filing says. In response, West wrote on New Year’s Eve to Thomas Ostertag, M.L.B.’s general counsel:

  • “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).”

In mid-January, West wrote to the J. P. Morgan lawyer, “It is unlikely we can recommend that we proceed forward with Greenberg,” and that he wasn’t certain further talks would narrow the gap between the bids.

  • The creditors’ filing says that Crane’s offer was worth $13 million to $20 million more than the Greenberg-Ryan bid and that Crane told H.S.G. and M.L.B. that he would have gone still higher.

Additionally, the brief says that in the days before the Rangers filed a petition for bankruptcy protection last month,

  • H.S.G. made a series of maneuvers, including some shifts of assets between subsidiaries, that made it “prohibitively expensive for a better transaction to be approved.”...

A memorandum of law filed with the court on Friday by Texas Rangers Baseball Partners, the entity that is being sold,

It said that the Greenberg-Ryan bid “offered the best combination of price and least execution risk.”"

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