MLB to give Rangers interim financing
FORT WORTH, Texas -- A judge on Wednesday approved a multimillion-dollar Major League Baseball loan to keep the Texas Rangers afloat during bankruptcy proceedings, raising hopes that the team's stalled $575 million sale might happen this summer.
U.S. Bankruptcy Judge D. Michael Lynn set a mid-June hearing on the Rangers' plan to pay the $75 million of the club's debt tied up in owner Tom Hicks' financially strapped ownership group. That would remove the team from the additional claims by creditors against Hicks Sports Group, which is not part of the bankruptcy filing.
Matters could be finalized at a July 9 hearing.
"We're pleased, and [the court dates] allow us to do the things important to us," said Hall of Fame pitcher and team president Nolan Ryan, whose group is the team's prospective buyer.
Although Ryan and partner Chuck Greenberg do not know when the sale might be final, they said the Rangers plan to be active at the July 31 non-waiver trading deadline, when the team might add more expensive players in a bid for the playoffs. The amateur draft is next month, and the team will be negotiating contracts with players all summer.
Concern among the lenders stalled the team's sale after the Hicks Sports Group defaulted on $525 million in loans last year.
The Rangers filed for bankruptcy Monday, saying it was the only option to proceed. Among the top 30 unsecured creditors is Alex Rodriguez, who is owed $24.9 million in deferred compensation six years after he was traded.
In approving the financing agreement Wednesday, the judge said the budget must be provided to lenders and the court-appointed trustee. Lynn said they could raise any objections, although the budget did not require their approval.
Lynn's ruling came after a two-day hearing in which the top lenders also sought to provide the Rangers' interim funding. After a bidding war earlier in the day, the lenders and Major League Baseball presented identical offers: $21.5 million.
Andrew LeBlanc, an attorney for the top lenders, said he had "grave concerns" about the Rangers receiving more funds from Major League Baseball, which has already provided $18.45 million in loans since last year.
LeBlanc showed a partnership agreement that was changed the day before the bankruptcy filing to remove the MLB commissioner's requirement to approve such filings. LeBlanc also presented an April news release from the league that said, "Major League Baseball is currently in control of the [Rangers'] sale process and will use all efforts to achieve a closing with the chosen bidder."
"We're trying to show this level of control ... calls into question whether they're the appropriate lender," LeBlanc said.
Rangers chief financial officer Kellie Fischer testified that the team preferred an MLB loan because they been successful partners in previous financial matters. Stephen Shimshak, an attorney for MLB, said the league was the best lender because it is "committed to the success of the Texas Rangers."
Also Wednesday, the judge ruled that the team could keep making severance payments to former employees and pay back some vendors -- owed a total of $2.4 million -- deemed top priority.
Copyright 2010 by The Associated Press