Monday is going to be an interesting day in the Phoenix bankruptcy court room, and it could be a bad day for the Coyotes future in Phoenix.
Up for discussion is a motion filed by the NHL and the City of Glendale to postpone the auction for the sale of the Coyotes to parties interested in keeping the franchise in Phoenix until mid-September and thus cancel or delay until after the 2009-10 NHL season the auction to relocate the Coyotes. But there are a number of other issues that have arisen as well.
1. We have learned that neither the Jerry Reinsdorf or the Ice Edge Holdings bids for the franchise include any cash and will only assume debt. This is an issue because the court bidding procedure required a $10 million deposit be placed, something neither Reinsdorf or Ice Edge Holdings have done. This has prompted Moyes and Balsillie to put forth a motion calling for the cancellation of the August 5th auction stating that there are no qualified bids.
2. Within the Jerry Reinsdorf bid there are indication as to what arrangements have been discussed with the City of Glendale. Apparently what has been discussed is having the city set up a new taxing district around Jobing.com arena that could provide up to $23 million in new funds which presumable would get funneled into team coffers. There is also an out clause that if the team is losing money after 5 years Reinsdorf can get out of the lease and move the team.
3. But maybe the most significant development is we have learned that SOF Investments Ltd., the largest secured creditor and owed approximately $80 million, has come out in support of the Jim Balsillie offer for $212.5 million stating that that was the only bid that would repay them in full.
4. Also rejecting the Reinsdorf offer was AEG who has a contract to manage Jobing.com arena stating there is a dispute over how much money AEG is owed. As we know, a significant condition of the Reinsdorf offer is that they can renegotiate the terms of the contracts and debts with many of the creditors. The more they can’t come to an agreement with (and SOF and AEG are significant) the more difficulties the Judge will have in accepting the Reinsdorf offer (and presumable the Ice Edge offers are similar).
In short, what the Reinsdorf and Ice Holdings offers entail are just an assumption of restructured debt and contracts without any up front cash. At this point in time the largest secured creditor (SOF), the largest unsecured creditor (Moyes), and at least one contract holder (AEG) object to the offers. Plus, neither Reinsdorf or Ice Edge have come to a final agreement with the City of Glendale either. Right now, the Coyotes remaining in Phoenix might be a long shot at best. I look forward to hearing what Judge Baum has to say on all of this tomorrow but with everyone wanting Wednesday’s auction either delayed or canceled outright, the chances of getting a resolution to this mess on Wednesday seems somewhere between slim and none, and leaning towards none.
More details can be found here and here.