Carolina Hurricanes owner Peter Karmanos has allegedly failed to make payments to a trust owned in part by three of his sons which has led to a $105 million lawsuit. Karmanos, 73, reportedly used the money in part to support the Hurricanes.
The cost of running the Carolina Hurricanes has reportedly put owner Peter Karmanos, Jr., into a big-money dispute with his three sons, including Jason Karmanos, the Pittsburgh Penguins’ vice president of hockey operations.
Click On Detroit’s Rod Meloni reported that three of Karmanos’ sons — Jason, Nick and Peter III — are suing their father over more than $105.6 million which is owed to a trust of which the sons own a piece. The fund was created with Compuware stock, the company Karmanos helped found, in 1996. The court filing says Karmanos owns 34 percent of the trust with the three sons each holding an equal share at 21.6 percent.
According to the lawsuit, Karmanos, Jr., borrowed from the trust in part to help fund the Hurricanes. The amount borrowed from the trust exceeds $350 million since 1999, according to the lawsuit, and the documents also state he used the trust as collateral to secure loans to support Carolina’s NHL club.
What triggered the lawsuit, which was filed May 26, was an amount of $101.3 million borrowed from the trust in 2013. The loan was to be paid back in annual instalments until June 2022, or one year after Karmanos’ death, with 2.15 percent interest. Karmanos allegedly failed to make any of the payments and now owes the trust the full amount plus more than $4 million in interest for a total of $105.6 million.
“As a result of (Peter Karmanos, Jr.’s) failure to make the required payments, pursuant to the terms of the June 2013 Note, (the trust) may accelerate and declare immediately due and payable the entire balance of principal and interest owing on the June 2013 Note,” the lawsuit reads.
Karmanos has been trying for much of the past two seasons to sell his majority stake in the Hurricanes, though one possible hangup is that that Karmanos, 73, wants to remain in control of the franchise. Last August, The News & Observers Luke DeCock reported a group in Carolina was looking at a potential bid but “lost interest because of Karmanos’ insistence on retaining control.” It might take an exceptionally strong bid for Karmanos’ ownership stake for him to cede power of the Hurricanes.
In 2015, Forbes ranked the Carolina Hurricanes at the 28th most valuable franchise is the NHL at $225 million. Only the Arizona Coyotes ($220 million) and Florida Panthers ($186 million) were valued at less.