OTTAWA (CP) - The Ottawa Senators are on shaky ground after a
proposed deal to re-finance the NHL club fell through south of the
The complicated deal was to involve the sale of the team by majority
owner Rod Bryden to a limited partnership for $186.7 million.
The deal would have given the Senators some badly needed cash and a
better lease with the Corel Centre. The terms included injecting $42
million into the team and paying off a $14.3-million loan from the
"The transaction will not proceed," Gordon Fox of Norfolk Capital
Partners, which managed the limited partnership, told the Globe and
Mail. "It's a sad story for everyone."
The Globe, citing a source, said the Senators could possibly run out
of money within weeks.
The NHL confirmed Wednesday that the re-financing of the Senators
"We're working with Mr. Bryden to see what the next step is going to
be," NHL spokesman Frank Brown said from New York on Wednesday.
Bryden declined comment.
"There's nothing to say at this point," Senators spokesman Phil
Legault said Wednesday.
The Senators have lost money in each of the past three seasons,
including $15 million in 2001-2002. The team owes more than $160
million to a group of creditors and faces continuing cash shortfalls,
The failure of the re-financing means creditors will continue to look
for a buyer for the Senators. A Boston company called Game Plan LLC
has already been hired to find one, according to the Globe.
Fox said the deal collapsed because a group of creditors refused to
go along with the re-financing.
"There were a bunch of other creditors, all of whom were prepared to
proceed, but there was one group that was not," he said. "And,
without the participation of all of the creditors the transaction
could not close."
Fox declined to identify the holdout, but sources told the Globe that
Fleet National Bank, a big U.S. regional bank based in Boston, raised
concerns about the deal last week.
The Senators owe Fleet and the Canadian Imperial Bank of Commerce $60
million under a term loan.
Toronto-based CIBC, one of Canada's major banks, has reported losses
from bad loans in the last year and has tightened its lending
practices to lower the risk on corporate loans.
Documents show the re-financing required both banks to agree to a re-
arrangement of the security on their loan. Fleet refused to agree
last Friday, according to the Globe. Lawyers for Norfolk and Fleet
negotiated feverishly over the weekend and by late Monday it appeared
a deal would be reached.
However, at noon Tuesday it collapsed.
"We feel that all of the solutions that we proposed were workable for
all parties concerned and are extremely frustrated that certain
lenders did not share this view," Norfolk said in a note to
partnership investors Tuesday.
This is the second time in the last year that the refinancing has
The saga began on Jan. 2, 2002, when Bryden sold the team to the
Norfolk partnership for $186.7 million. Norfolk planned to pay for
the team by selling 1,358 units to private investors for up to
$150,000 per unit. However, that deal fell apart when Covanta Energy
Corp., a U.S. company that is a major lender to the team, filed for
bankruptcy protection in April.
With the collapse of the refinancing Tuesday, Fox said the
partnership is dead.
"There's no plan to resurrect it and start again from scratch."
The deal's failure is also a blow to Bryden, who would have kept
control of the team under the overall refinancing. (Globe and Mail)