Press Room
July 14 (Bloomberg) -- The Texas Rangers professional baseball club will hold an auction on Aug. 4 with an opening bid from the group that agreed to buy the team just before the filing for bankruptcy reorganization in May.
Other bids are due initially on Aug. 3. The auction will be held in the courtroom.
The first bid will come from a group led by current team President Nolan Ryan and sports lawyer Chuck Greenberg. They signed a contract to purchase the club for about $304 million cash prior to the Chapter 11 filing on May 24.
The team filed a new motion yesterday for approval of auction procedures after the Ryan-Greenberg group agreed to modify the original contract by raising the price to $306.7 million. In addition, they sweetened the offer by lowering an escrow holdback from $30 million to $10 million and by not forcing other purchasers to take over the lease for the team airplane.
The chief restructuring officer for the partnerships that own the team told the judge at yesterday’s quickly convened hearing that an auction on Aug. 4 wouldn’t give other bidders enough time. The team wanted the auction July 22.
The judge at first took sides with the team on having an auction in July and then came down with the Aug. 4 date to compromise the positions by the team and the restructuring officer.
If the Ryan-Greenberg group is outbid, they would receive a $15 million breakup fee. In return for the fee, the so-called stalking-horse agreed to waive exclusivity provisions in the May contract.
Before the auction, other bidders must be approved by Major League Baseball. Although the leaders of the two competing groups have approval, the members of their groups don’t as yet.
The first competing bid at auction must be $15 million higher than the Ryan-Greenberg offer to cover the breakup fee. For Bloomberg coverage on yesterday’s hearing, click here.
Secured lenders owed $525 million have security interests in the partnerships that own the team. The lenders opposed the contract with the Ryan-Greenberg group and believed there would be a higher offer at auction. Under the May contract, the lenders would recover $256 million, according to the team’s disclosure statement.
William K. Snyder was appointed as restructuring officer for the two partnerships that own the team. His appointment came after some of the lenders filed an involuntary bankruptcy petition against the partnerships. His responsibilities include deciding whether the partnership would vote for or against the team’s Chapter 11 reorganization plan. He was opposed to the team’s reorganization plan if the original contract weren’t modified and an auction weren’t held.
The Rangers moved from Washington to Texas in 1972. The team defaulted on payments owing to the lenders in March 2009. Michael Rochelle, a brother of Bloomberg reporter Bill Rochelle, is a lawyer for an agent for the lenders. The partnership that owns the team is Texas Rangers Baseball Partners.
The case is In re Texas Rangers Baseball Partners, 10- 43400, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).
Statistics
Claim Trading Activity Declines in June
As major Chapter 11 filings have fallen this year, so too have the number of claim trades reported to the country’s bankruptcy courts.
In June $2.146 billion in claim trades were reported, the second fewest this year, according to a report yesterday from SecondMarket Inc. In amount, traded claims in June were one- third fewer than May.
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