Kukla's Korner Hockey
by George Malik on 06/21/12 at 02:57 AM ET
The New York Times’ Ken Belson and Richard Sandomir report that New Jersey Devils owner Jeffrey Vanderbeek is attempting to pull a financial rabbit out of his hat at he faces a $77 million payment on nearly $200 million of arena debt, which Belson and Sandomir say is “overdue”:
Jeff Vanderbeek, the controlling owner of the Devils, could complete a deal by the end of next month to erase most of the team’s debt and bring in new minority owners, according to two people with knowledge of the negotiations.
Vanderbeek has had a term sheet for new investors on his desk since the end of May, these people said. The document, a copy of which was obtained by The New York Times, explains that the investors’ infusion of cash will help pay off debt on the team and Prudential Center, and will raise working capital. It does not list the name of the new investors.
In recent months, the team has been focused on repaying about $77 million that is overdue to its banks, which is only a portion of overall team and arena debt. The term sheet, which was dated May 27, three days before the Devils opened the Stanley Cup finals against the Los Angeles Kings, promised that new investors would get a so-called put option after five years that would allow them to sell their shares in the team to a third party.
In addition, the term sheet said, Vanderbeek will invest $10 million to take an additional stake in the team, but his contribution has been modified since then. He controls 47 percent of the team, and while it is unclear whether the extra shares will make him a majority owner, Vanderbeek is expected to remain the controlling owner.
Since the term sheet was issued, Vanderbeek has been able to refinance and restructure much of the total debt of about $178 million. That part of the deal is almost complete, which is allowing Vanderbeek’s financial adviser, Three Ocean Ventures, to move to raising equity from investors who have already been identified, according to the people with direct knowledge of the deal.
The term sheet also specifies that a compensation committee that includes the major shareholders be created to approve player contracts of more than three years that are worth more than $7.5 million after the first year, and which increase overall team payroll. The captain Zach Parise, goalie Martin Brodeur and defenseman Bryce Salvador are among the players who are set to become unrestricted free agents July 1.
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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.
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