Palace Sports financed $70-million of team sale
Why is this interesting? Because the company that wanted so badly out of the hockey business is still so entwined, and even more deeply (about $20-million more deeply) than we originally believed. It also is in a position, though unlikely, to regain control of the team if OK Hockey cannot repay the loan.
"We're just filling the role of a lender right now," Palace CEO Tom Wilson said of his company's $70-million financing of the $200-million sale. "We just had to step in and get it done."
This was a marriage of convenience more than anything else. OK Hockey, which includes principal owners Oren Koules and Len Barrie, lost financing from two investment banks while trying to buy the team. And Barrie said having a deep-pocket business like Palace Sports, given the worldwide credit crunch and the uncertainty of the banking industry, is really a blessing. Barrie called his dealings with Palace Sports "fantastic."
We've gone through this before when the sale was announced, but here is the plan:
OK Hockey came up with $100-million of the $200-million purchase price. Palace Sports and Galatioto Sports Partners, a New York spots investment bank came up with the rest. The plan is to pay off Palace Sports' interest bearing note and have GSP as the sole lender. But that won't happen until the credit crises eases. Meanwhile, Barrie said OK Hockey has a three-year plan to make the team profitable.
Palace Sports has said it lost $80-million in the nine years it owned the team. But Barrie said, "There's a solid business here. We think we can turn this around and make it profitable."