Saturday, April 4, 2009
Default In Big D
Tom Hicks company, Hicks Sports Group, has defaulted on $525MM in loans. HSG owns the Dallas Stars and the Texas Rangers, and the loans were used for the operation of the two teams. Hicks says that he has not made the interest payment on a $350MM term loan, a $100MM second lien, and a $75MM line of credit to force the bank syndicate to renegotiate terms, grant HSG access to the full line of credit, and access to an interest reserve account. Hicks says this will in no way affect the day to day operation of the two teams, and that he is now willing to sell up to 49% of each team to minority partners to bring more cash in to the businesses. Hicks indicated that he did not want to bring in minority partners, but needed to so he could repay the loans, and that the downturn in the economy had forced these actions. One has to wonder if the economy is going to force other franchises to look at similar measures. At the least, the financial aspects of all teams- from contracts to day to day operating expenses- are going to come under closer scrutiny.