Creditors worried over McCourt cash deal
A committee representing creditors in the Dodgers' bankruptcy case raised concerns Monday about owner Frank McCourt's proposed financing deal, the Los Angeles Times reported.
A judge will decide Wednesday whether to allow McCourt to pursue a $150 million deal with Highbridge Principal Strategies or force him to accept a loan from Major League Baseball to keep the team afloat during the bankruptcy proceedings.
According to The Wall Street Journal, the deal with Highbridge, a hedge-fund unit of J.P. Morgan Chase & Co., came with an undisclosed $5 million fee on top of the disclosed $4.5 million fee and nearly 10 percent interest.
The MLB deal carries no fees and only seven percent interest.
"There can be no question the [proposed MLB financing] is economically superior," an attorney for the creditors' committee wrote in a filing Monday, according to the Times. "Yet the committee understands the [Dodgers'] concerns with the proposed [MLB financing] given the tense relationship between the parties."
McCourt's attorneys argue their client should not be subject to MLB financing due to the league's "hostile" relationship with the debt-ridden franchise.
According to the Times, the embattled owner's lawyers said in a filing Monday the MLB loan is a "deal with the devil," adding that the bankruptcy court has no grounds to impose the league's loan regardless of the financial terms.
"The financing purportedly offered by [MLB commissioner Bud Selig] is nothing but a pretext for the commissioner to burden and exert control over the Dodgers in furtherance of the commissioner's ulterior motive of seizing control of the [Dodgers] and ousting Mr. McCourt," the attorneys wrote.
Meanwhile, despite its assessment that "the fees and interest associated with [McCourt's proposed loan] are excessive," the creditors' committee did not ask a judge to ban McCourt from making the deal, instead suggesting a revision of the proposed loan.
In particular, the committee's suggested modifications sought to eliminate the use of Dodgers' assets as collateral for the loan and require lenders to approve any sale of the team.
McCourt filed for bankruptcy last month in an apparent last-ditch effort to keep Selig from seizing the cash-strapped ballclub and putting it up for sale.
Baseball commissioner Bud Selig rejected a proposed 17-year, $2.7 billion television rights deal with FOX, which McCourt has said is vital to rescuing the team from its current financial crisis.
Selig balked at the deal in part because of a divorce settlement between McCourt and his estranged wife, Jamie, that would have diverted $173.5 million of the FOX money to the couple and their attorneys, rather than having it go directly to the Dodgers.
McCourt said he offered to dedicate the entire $385 million in up-front cash to the Dodgers after Selig's initial rejection, but "the commissioner still expressed no interest."
FOX is owned by News Corp., which also owns NewsCore.