Boston bank said it wasn't alone in rejecting Senators-saving bid
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TORONTO (CP) - A Boston-based banking group acknowledged Thursday that it rejected a proposal to raise $235 million for the Ottawa Senators - but pledged to continue working on a solution that would protect the bank's interests and keep the team afloat. FleetBoston Financial Corp. - which together with Canada's CIBC is owed $60 million from the debt-strapped franchise - also said it was not the lone opponent to the complex deal, which would have reduced team debt and injected badly-needed cash for its operations, including paying its players.
"Fleet is one of many creditors that did not approve the terms of the proposed transaction for the Senators," a spokesman for the bank said in a prepared statement.
"We will continue to co-operate with the NHL and other interested parties in support of the ongoing operations of the team."
Fleet would not say why it backed out of the deal, putting an end to a partnership in which investors bought units that would have helped raise about $235 million.
Senators owner Rod Bryden - who under the terms of the unit sale managed by Toronto-based Norfolk Capital Partners, would have retained control of the team - wanted the financing deal in place by Dec. 31. That date was important for buyers of the units, who were counting on the deal being in place by year's end in order to qualify for tax writeoffs on players' salaries.
The collapse left the Senators unable to pay their players this week, though the team has said it will have those payments delivered within a week.
Senators spokesman Phil Legault said Thursday that the team "recognized that there was a possibility of failure (of the deal), so there was alternatives planned. Now, Mr. Bryden is looking at those alternatives."
He would not say what those alternatives are, though Game Plan LLC, a Boston-based consulting firm, has been hired to search for a buyer. Nelson Peltz, an American businessman who owns the Arby's fast-food chain, was rumoured last year to be interested in the team.
The Senators are said to owe about $350 million in total debt - much of it tied to the construction of the Corel Centre years ago. About $160 million of the debt is owed to a group of creditors, including Fleet and CIBC.
CIBC did not return calls Thursday for comment.
The Norfolk partnership deal required approval by both banks.
However, a source familiar with the proposal said Fleet rejected the deal likely because it meant it would exchange its financial stake in the team in favour of hopes the money-losing Senators can turn a profit after years of operating losses.
"From a creditor's point of view, they were looking at what they were going to get paid out of this deal and what they would have to give up in restructuring this security, and I gather they decided it wasn't rich enough for the risk they were taking," said the source.
"They're sitting back with security over the assets of the team, saying we want to get paid and if you want us to give up anything, there has to be enough in it for us to warrant giving it up," the source said. "It was a win-win for Bryden and a win-win for the investors. But they weren't a part of this."
The Senators also owe about $14.3 million in a loan from the National Hockey League, and more than $60 million to Covanta Energy Corp., a U.S. company that is operating under bankruptcy protection.
Creditors of Covanta - which helped finance the Senators' initial $50-million expansion fee in 1990 and provided loans for the Corel Centre - approved the unit-sale proposal in Manhattan last month.
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