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January 25, 2010
NBA Approval of Prokhorov “Days Away”
NetsDaily
The NBA Board of Governors is “days away” from approving Mikhail Prokhorov as the Nets’ new owner, according to reports. There’s also confirmation of a month-old report that the Russian billionaire has agreed to throw another $100 million into Barclays Center.
...Now, there’s word from inside the franchise that Prokhorov has indeed committed to buying more than two-thirds of the infrastructure bonds–$100 million worth. The remainder will reportedly be marketed by Forest City Enterprises, the Cleveland-based company that is currently the team’s biggest shareholder at 23%. FCE is controlled by Bruce Ratner’s extended family.
The manner in which the debt is structured will also give Prokhorov effective control over the arena and in fact could give him actual control in one (unlikely) circumstance.
As Project Finance wrote in December, “If Prokhorov buys the subordinated [infrastructure] bonds, which are serviced through lower quality and more uncertain cashflows, and the project experiences a sustained period of weak financial performance, then in the event of a default on the subdebt, he would take control of the project.”
Critics have noted the consequences of such a default. Norman Oder of Atlantic Yards Report wrote, “The upshot, though, is that the enormous state effort to get the project going–the Blight Study, the use of eminent domain, the tax-exempt bonds, etc.–could turn out to provide the most significant benefits to Russia’s richest man.”
Posted by eric at January 25, 2010 9:08 AM