One of the many topics circulating around the halls of the Marriott and Hilton hotels where All-Star Game media and MLB execs are sequestered in Anaheim, was the announcement yesterday that the prospective ownership group of the Texas Rangers led by Chuck Greenberg and Nolan Ryan are suing the Rangers for breach of the Asset Purchase Agreement (APA) forged between the Rangers and the group on May 23. The “adversarial” filing also claims William Snyder, the Chief Restructuring Officer appointed by Judge Michael Lynn in the case, over stepped his scope by introducing other bidders into the mix.
“The CRO does not, and never had, any authority to solicit alternative bids or negotiate with prospective bidders. Notwithstanding his limited authority as expressly circumscribed by the Court, the CRO is attempting to seize control of this Bankruptcy Case by inducing the Debtor to withdraw the Bidding Procedures Motion and shopping the Debtor’s assets,” the filing said.
Today, the other pieces of this move, have dropped into place.
First, Daniel Kaplan of the SportsBusiness Daily reports that The Rangers do not plan to contest the lawsuit brought by Greenberg and Ryan.
“The (team) has apparently consented to a form of temporary restraining order that would preclude the (team) from soliciting alternative bids to the proposal set forth in the (sale agreement) until the confirmation hearings commence on July 22, 2010 concerning the (sale),” the CRO’s lawyers contended. “Given the apparent alignment of interests between the (team) and (Greenberg and Ryan) and (the team’s) apparent willingness to agree to the temporary restraining order, it is clear that the parties to the complaint cannot, and will not, adequately represent Ranger Equity’s interests in this lawsuit.”
Secondly, the Rangers have just filed a second motion to establish procedures of an open auction scheduled for July 22, 2010, at 9:30 a.m. (CT) for the Rangers. The new motion reads, in part:
Under the amended terms of the Asset Purchase Agreement, the (Greenberg/Ryan group) has improved its overall bid for the (Rangers) Assets by $2.7 million to $306.7 million. In addition, the Purchaser has agreed to reduce the amount held in escrow following the transfer of the (Rangers) Assets from $30 million to between $10 million and $12 million, depending on the Closing Date (as defined in the Asset Purchase Agreement). The (Greenberg/Ryan group) also agreed to modify section (part of) the Asset Purchase Agreement such that these bidding procedures could take affect.
In addition, (Hicks Sports Group) has agreed that its certain Shared Charter Services Agreement for use of the charter airplane is terminable at the end of the current baseball season without penalty. These three heavily negotiated compromises, representing concessions from both the (Greenberg/Ryan group) and the ultimate parent of (the Rangers), greatly enhance the attractiveness of the overall bid and evidence a willingness by all sides to provide additional value to the Debtor’s Creditors.
The new motion goes on to say that the auction should still take place with the Greenberg/Ryan group, yet again, willing to waive their exclusivity agreement while using the improved Asset Purchase Agreement as a stalking horse bid, and still include the $15 million “break-up fee”, should the Greenberg.Ryan group not successfully be approved for ownership, something that Snyder initially agreed to, but later rejected.
(READ THE NEW MOTION FOR BID PROCEDURES)
The new motion also includes MLB’s ownership approval process saying:
At the Confirmation Hearing, the Debtor will seek an order confirming its plan pursuant to section 1129 of the Bankruptcy Code (the “Confirmation Order”) approving (i) the Debtor’s plan of reorganization and (i) a sale of the TRBP Assets pursuant to the Asset Purchase Agreement to either the Selected Bidder or the Backup Bidder (if applicable), that is determined by the Debtor to have submitted the highest and best bid and the second highest and best bid, respectively, (iii) that such sale be consummated only upon and after the approval of a sale to such person(s) by Major League Baseball in accordance with the Major League Constitution, the MLB Ownership Control Guidelines, and such other applicable rules and regulations of Major League Baseball.
MLB’s rules require 75 percent of the 30 owners to agree to ownership transfer. The league has repeatedly said that they support the Greenberg/Ryan group, but a report in Monday’s edition of the SportsBusiness Journal mentions that there could be a warming between prospective bidder, Jim Crane, and MLB after Crane backed out of the purchase of the Houston Astros several years ago at the 11th hour.
It is unknown whether Snyder will approve the latest bid motion after his initial acceptance of the last version, before then rejecting it the following day.
More news as it becomes available.
Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to Forbes SportsMoney blog. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.
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