Friday, 6 May 2016
Last updated 43 min ago
Apr 3 2009 | 9:40am ET
Private equity legend Tom Hicks’ sports team holding company has defaulted on more than $500 million in loans, a source has told FINalternatives.
Hicks Sports Group, which owns baseball’s Texas Rangers and hockey’s Dallas Stars, failed to make its interest payment on $525 million in syndicated bank loans on Monday. The group is now in talks with its lenders about a forbearance.
Hicks made his billions on leveraged buyouts, founding private equity firm Hicks Muse Tate & Furst, now HM Capital, in 1989. He retired from the firm in 2006.
According to the source, who has seen documents relating to the loans, Hicks defaulted on a $350 million bank term loan, $100 million second-lien loan and a $75 million revolving credit facility. A spokesman for Hicks Sports declined to comment.
Hicks also owns a 50% stake in the English Premier League’s Liverpool Football Club, but through a separate entity. According to the source, the loans are partially secured by the Rangers and Stars, but not by Hicks’ stake in Liverpool or his personal assets.
Last week, Major League Baseball’s Web site reported that Hicks had hired Merrill Lynch to explore the sale of a minority stake—of up to 49%—in the Rangers, which Hicks bought in 1998 from an ownership group that included former President George W. Bush. Bush, a longtime friend of Hicks, is scheduled to throw out the ceremonial first pitch at his former team’s home opener in Arlington, Texas, on Monday.
According to MLB.com, Hicks is also trying to sell a minority stake in the Stars. It is unclear whether the proposed stake sales, which reportedly can be either in whole or in part, are related to the default. Hicks’ Liverpool co-owner, George Gillett, is trying to sell his Montreal Canadiens hockey team and his Liverpool stake. Hicks and Gillett have reportedly had a falling out over the soccer club, with the former blocking the latter’s attempt to sell most of his stake last year.
The Hicks default is the most dramatic manifestation of the current economic crisis on the sports world. In February, the National Basketball Association borrowed $175 million—on top of its existing $1.7 billion credit facility—making it available to 15 teams having trouble making ends meet.