Reinsdorf, creditors reach deal to buy Coyotes
Jerry Reinsdorf's group has taken a big step forward in its bid to buy the Phoenix Coyotes.
As a result, Canadian billionaire Jim Balsillie has suffered another setback.
The lawyer for SOF Investments, the biggest creditor owed money by the bankrupt NHL franchise, said Tuesday at a hearing in U.S. Bankruptcy Court in Phoenix that SOF had reached an agreement in principle with Reinsdorf's group.
SOF Investments previously threw its support behind Balsillie, the co-CEO of BlackBerry maker Research In Motion, who offered $212.5 million for the team on the condition that he can relocate it to Hamilton, but it appears SOF has flip-flopped.
Lawyer Steven Abramowitz announced the deal included a "substantial buydown" of the $80 million US that SOF is owed, with the rest of the money rolled over into debt.
Abramowitz asked the court to "do anything it can" to keep Reinsdorf's bid afloat. Reinsdorf is the majority owner of both baseball's Chicago White Sox and basketball's Chicago Bulls.
The relocation question
Balsillie wants Judge Redfield T. Baum to set a deadline to determine the fee the NHL would charge to move the team to Hamilton. But the NHL says that issue doesn't matter because its owners have rejected Balsillie as a potential owner.
Baum said he won't act on the relocation issue until he rules on whether Balsillie can buy the team despite the NHL's objections.
If the NHL loses that battle, lawyer Shep Goldfein said the league would immediately appeal the ruling. This would open the possibility of a court-ordered stay of the sale.
Outside the courtroom, Abramowitz wouldn't say whether SOF still supported Balsillie's offer as well. Under Balsillie's bid, SOF would get all $80 million it's owed.
Balsillie's representative, Richard Rodier, said the announcement from SOF came as a surprise.
"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. "You just work through the process."
Baum, who scheduled Tuesday's hearing to work out remaining issues in the case, set another hearing for Sept. 2 to work through other matters. The biggest one on the table is whether the court should overrule the NHL owners' rejection of Balsillie as a potential owner.
The NHL's board of governors rejected Balsillie's bid by a 26-0 vote because they consider him untrustworthy.
Baum also ordered a stop to any attempt by Coyotes owner Jerry Moyes or Balsillie to get information from the applications of Reinsdorf's group and Ice Edge, another potential buyer, from the NHL.
The pair wanted the confidential files to see whether Reinsdorf was treated differently in his application.
The Reinsdorf group's lawyer, Alan Klein, said earlier in the hearing his clients were tired of the interfering as they worked out the details of their offer.
"I don't know how long we're going to be in here wasting time and money," Klein said, adding that confidential information had already gone public due to Moyes' lawyers, who apologized and said the leaked information was a mistake.
Following the hearing, NHL commissioner Gary Bettman said he understood where the Reinsdorf group was coming from.
"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.
If Balsillie's bid is successful, he wants to move the Coyotes immediately. This is something the NHL says can't be done, and the league is looking for Baum to rule the team has to play in Arizona next season.
"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."
The auction of the team is Sept. 10, two days before the Coyotes open their training camp and five days before they play their first exhibition game.
The obstacles facing Reinsdorf's group include persuading Baum that their $148 million bid — which is much smaller than Balsillie's — is acceptable.
With files from The Associated Press