PHOENIX – Canadian billionaire Jim Balsillie’s bid to buy the bankrupt Phoenix Coyotes and move them to southern Ontario suffered a setback Tuesday when a rival group reached an agreement in principal with the franchise’s largest secured creditor.
Steven Abramowitz, lawyer for SOF Investments, announced the agreement with the group, headed by Jerry Reinsdorf, at a hearing in U.S. Bankruptcy Court on Tuesday. He said the deal included a “substantial pay-down” of the US$80 million SOF is owed, with the rest rolled over into an ongoing debt.
Abramowitz urged the court to “do anything it can” to keep Reinsdorf’s bid alive.
SOF Investments had previously declined to back the Reinsdorf bid, saying it supported the proposal by Balsillie, who has offered $212.5 million, contingent on moving the team to Hamilton.
SOF would get all $80 million under Balsillie’s bid.
Outside the courtroom, Abramowitz declined to say whether the company still supported Balsillie’s offer, as well.
Balsillie’s representative Richard Rodier said Abramowitz’s announcement came as a surprise in the long, twisted bankruptcy process.
“There’s surprises, there’s ups, there’s downs and you can’t get too hyped up about the highs and you can’t get too low about the lows,” Rodier said outside the courthouse. “You just work through the process.”
Judge Redfield T. Baum scheduled Tuesday’s hearing to sort out the remaining issues in the complex case. He set a hearing for Sept. 2 on several matters, most importantly whether the court should overrule the NHL owners’ overwhelming rejection of Balsillie as an owner.
Baum ordered a stop to any attempt made by Coyotes owner Jerry Moyes or Balsillie to get confidential information on the applications of the Reinsdorf group and the other potential buyer, Ice Edge, from the NHL. He also said no depositions of those involved in either potential bid would be permitted.
Moyes and Balsillie sought the information because they wanted to see if Reinsdorf, the majority owner of the NBA’s Chicago Bulls and baseball’s Chicago White Sox, was treated differently in his application than Balsillie. NHL’s board of governors rejected Balsillie’s bid to become an owner by a 26-0 vote on grounds he was untrustworthy.
Earlier in the hearing, the Reinsdorf group’s lawyer Alan Klein said by telephone that his clients were fed up with the meddling and interfering as they attempted to work out the details of their offer.
Klein indicated Reinsdorf was on the brink of withdrawing the bid.
“I don’t know how long we’re going to be in here wasting time and money,” Klein said, noting that confidential information already had been made public by Moyes’ lawyers, who said it was a mistake and have apologized.
Outside the courthouse after the hearing, NHL commissioner Gary Bettman said he understood the Reinsdorf group’s position.
“They feel that throughout this process there have been a series of frustrating obstacles that have been placed in their way, roadblocks if you will, to try, they believe, to discourage their bidding,” Bettman said.
Balsillie wants to move the team immediately if his bid is successful, something the NHL contends can’t be done.
Auction of the team is set for Sept. 10, two days before the start of training camp and four days before the Coyotes play their first exhibition game. The NHL wants the judge to rule that the team will play next season in Arizona.
“We think that the sooner that the world knows that the Coyotes are going to be in Glendale next season, the easier it will be for the club to move forward, interact with its fans, sell tickets, make arrangements for the television broadcasts and the like,” Bettman said. “As we’ve repeatedly told the court, it is impossible to move this franchise for next season.”
Reinsdorf’s group still faces major hurdles, including reworking a lease agreement with the city of Glendale and persuading the judge that the bid is acceptable, even though the $148 million offer is much smaller than Balsillie’s bid.
Several depositions have been requested by lawyers in the case, but the judge said he would pare down any list because of the limited time left before the auction.
Balsillie wants the judge to set a deadline for determining the fee the league would impose to move the franchise to Hamilton. The NHL says the issue is moot because of the rejection of Balsillie by the owners.
Baum delayed action on the relocation issue until he rules on whether Balsillie can buy the team over the league’s objections. If the league loses that one, lawyer Shep Goldfein assured the judge that the NHL would move in a hurry on any relocation request.
However, Goldfein and Bettman indicated the league would immediately appeal any such ruling. That opens the possibility of a court-ordered stay of the sale.