A report appeared this afternoon on US-based website FINalternatives claiming that Hicks Sports Group, the company that owns Tom Hicks’s US sports interests including the Dallas Stars and Texas Rangers, had defaulted on loans amounting to $525m (£362m).
The report referred to an unnamed source and said that Hicks Sports Group (HSG) had “failed to make its interest payment on $525 million in syndicated bank loans on Monday.” It also said that HSG was in “in talks with its lenders about a forbearance”.
FINalternatives is a website styling itself as “the premier, independent source for news on the alternative investment industry” – and has a tagline of “hedge fund and private equity news”.
FINalternatives claim their source has seen documents relating to the loans and that “Hicks defaulted on a $350 million bank term loan, $100 million second-lien loan and a $75 million revolving credit facility.”
FINalternatives say their source told them that “the loans are partially secured by the (Texas) Rangers and (Dallas) Stars, but not by Hicks’ stake in Liverpool or his personal assets”.
FINalternatives said they hadn’t been able to get a comment from anyone at Hicks Sports Group.
Shortly after that report went online came a report at 10:10am local time (4:10pm UK time) on the blog site of “D Magazine”. Headlined “We Want The Banks To Be Reasonable” the report started out by referring to Liverpool fans.
Evan Grant wrote: “Before we go any further, we should probably explain to our British friends that Liverpool Football Club is not among the HSG holdings and neither are any of Hicks’ other business interests.” Liverpool FC does appear as one of the assets of HSG on their website portfolio page.
D Magazine said that the loans were not yet in default, but they could be placed into default early next week. It said that an interest payment had been due on Tuesday (31st March) but that HSG had “elected” not to make the payment. It said that HSG was currently “trying to negotiate with the 40 lenders to allow it to make the interest payment out of the interest reserve provision”.
Before that can happen, according to D Magazine, “the banks that hold 51 percent of the loans” would have to give their approval. If not then those banks could “place the loans in default early next week if a re-negotiation in terms is not reached”.
D Magazine then quoted Tom Hicks. “We’re optimistic that a satisfactory resolution will come together in the next couple of weeks with our lenders’ cooperation. The important thing is that none of this impacts either team (Stars or Rangers) or the fan experience at either venue.”
Hicks tried to play down concerns: “We’re prepared to fund the operations of both clubs for the next 12 months while we continue to seek additional investors.”
Hicks called for the banks to be “reasonable”, saying: “We just would like the banks to be reasonable and hope they will go along with our proposal.”
Hicks went on: “We’ve built two great teams, one with a great future and one that has been the most profitable and successful NHL franchise in the southern United States. We’ve built a great arena that is Dallas’ version of Carnegie Hall and Madison Square Garden all rolled into one. This is a short-term issue about a lot of long-term value.”
The D Magazine blog also referred to the recent announcements from Hicks that he was looking to sell some of his share in the Rangers and the Stars, and said that selling up to 49% of the two teams “could add between $400-500 million in cash to the HSG reserves”.
The news has clearly come as a surprise to the press in Dallas, who are continuously updating their websites with any information they can get. In The Star Telegram’s report of the story they say Hicks has been in touch by email, denying that the two teams could be repossessed: “There is no possibility of banks owning the teams.”
Hicks said that both the NHL and MLB (the two leagues his Hockey and Baseball teams play in) are helping him to find alternative investment but that he will pay their bills himself in the meantime: “I am working closely with both leagues to find quality partners that share my long term vision of building these two great franchises. I will continue to fund the teams’ operations. I am the largest creditor to HSG and need 51 percent of the banks to agree with my plan.”
The Stars are almost at the end of their season now, with only very much an outside chance of reaching the play-offs. The Rangers’ season gets underway on Monday.
The report has come out on a day when Liverpool FC announced extended contracts for captain Steven Gerrard and Dirk Kuyt, agreeing to stay until 2013 and 2012 respectively.
It remains to be announced, as yet, what Hicks has got planned in terms of financing Liverpool FC beyond the end of the RBS/Wachovia facility’s current end-date in July. Quite what the big loan departments of the two banks will make of this news also remains to be seen.