NEWSLETTER
Without getting into complicated finance stuff (that I don’t fully understand), the gist is that this past week, lending institutions got a whole lot less likely to be happy about doing long-term financing, especially at the very nice interest rates of a month ago. Folks in the know (read: not me) were afraid that this could put the kuybash on the Ricketts deal – recall, the Tribune is requiring Ricketts to get financing for the majority of the deal (as opposed to just paying cash) so that it can save on its capital gains when it sells the team.
But, sources close to the deal are now saying it may go down sooner rather than later, despite the recent financial turmoil.
The Ricketts family’s $900 million purchase of the Chicago Cubs from Tribune Co could close soon, despite disagreements on the value of broadcast contracts, two sources familiar with the talks said.
“The sides are not that far apart,” said one source, who asked not to be identified. “Hopefully, it will be a matter of a week or two.” CNBC.com.
The other thing I’ve said all along is that you have to keep in mind: the three large lending institutions involved in the deal – JP Morgan Chase, Citigroup, and Bank of America – are all creditors of the Tribune Company. Therefore, they have a strong incentive to see this sale go through to the highest bidder.
Perhaps the most interesting piece in the article is the discussion of the financing. As we know, Ricketts is essentially paying $400 million in cash, and had secured $350 million in financing from major lending institutions.
But what about that $150 million gap? All we’d heard were some whispers about a private offering of $20 to $25 million shares, or maybe soliciting investments from celebrity fans.
It seems the gap isn’t as large as we’d thought.
The Ricketts family raised more than $400 million in February through the sale of TD Ameritrade shares back to the online discount broker. The sources said the Ricketts also have lined up $450 million in financing with JP Morgan Chase, Citigroup, Bank of America and two other institutions.
Maybe I’ve been out of the loop, but that’s news to me. Who are these two other institutions? That I don’t know. Are they also creditors of the Trib, and thus less likely to be scared off by tumult in the debt market?
So that leaves a $50 million financing gap. Reach deep, friends. Let’s buy us some Cubs.
