For the majority of Texas Rangers fans, the statement from Hicks Sports Group saying that a sales agreement between HSG and a group of investors headed by Chuck Greenberg and Nolan Ryan was a sign that the end had finally come, new owners were on the way.

But, in a case where Hicks Sports Group debt is still hanging over the heads of the Rangers, there’s a chance that the deal may not meet the muster of HSG’s biggest lender.

One of the final steps in the process includes approval from the 40 creditors that HSG is in debt to before approval from MLB. As reported by Daniel Kaplan of the SportsBusiness Journal, Monarch Alternative Capital, a hedge fund that now owns $100 million of the $525 million of debt that Tom Hicks has incurred may be a deciding factor in the sale. Monarch Alternative Capital is known as a “distressed debt buyer” or in more unflattering terms, a “predator” that looks to “buy debt at a discount from banks that hold defaulted loans and then hopes to make more by selling the assets.”

Because Monarch is in the business of extracting as much of a profit as possible in these types of deals, they could have a considerable say in the matter. As reported by the SBJ:

Monarch saying no to a deal that guarantees it a sure amount of cash could be considered an unlikely scenario, but sources are painting a picture of Monarch as being willing to go to the mat if it thinks it is not getting every penny it should.

It has been reported from multiple sources that the bid from Houston businessman, Jim Crane, was higher than the Greenberg-Ryan bid. It is unknown if Crane would be allowed back into the bidding process, should Monarch Alternative Capital not approve of the deal that the Greenberg-Ryan group has on the table.

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Comments (7)

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written by Parman, January 26, 2010

If the debt is paid in full, creditors have no say in the sale as this isn't a bankruptcy, right?

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written by Maury Brown, January 26, 2010

I would think so, yes.

This may also explain why Hicks went from being #2 stakeholder to minimal minority partner.

To add... Very high ranking source says there is high confidence the deal gets done.

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"Predatory" Hedge Fund Could Be Blessing
written by Texa*summerHeat, January 26, 2010

Maury Brown has reported and Lone Star Ball has it posted that a $100 million loan against HSG (Hicks Sports Group) was purchased by a 'Predator Loan Group', which could disapprove the sale of the Texas Rangers to the Greenberg/Ryan group and possibly even reopen the negotiations which could bring Jim Crane back into the negotiations.

Hold everything, guys, that is not the way it works. In fact, it could help matters, and probably already has. The predator loan company bought the note from the original owner at cents-on-the-dollar, so the amount now owed is no longer the original amount. The predator has been calling, e-mailing, and generally hara*sing a HSG representative on a daily basis since buying the loan. They have even probably sent an official buyout amount to HSG, with a deadline, that is well below the initial value of the loan (usually about half). If HSG will pay it in one huge lump sum, and maybe in two or three smaller amounts over three months, they will officially be out from under that loan instantly.

HSG and the negotiating group probably has already frozen that into the negotiations. The predator will make a huge profit, but the original owner may still have HSG down as a negative on its credit report. Remember, this thing was put together by LAWYERS. Lawyers eat predator groups alive.

More at http://tsheat.mlblogs.com

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Not factually correct
written by JackDaddy, January 26, 2010

When a vulture fund (or any buyer or a*signee of debt) acquires an interest in a loan it acquires the ENTIRE interest, regardless of whether it acquires it at a discount. The full amount is still owed by the borrower (here, HSG). What I think SummerHeat means is that the new holder of the debt only has at stake the smaller purchase price, so they might be motivated to take a payoff at less than face. That is correct, but they want as high a price possible, as that is their profit. That is the return on their investment that they are seeking. But be clear, HSG owes the full amount, not the discounted amount.

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The REAL SCOOP
written by Hammer, January 27, 2010

In addition, it is a misnomer to call Monarch a "predator"...they are in fact an extremely sophisticated hedge fund that has more firepower (and certainly as many lawyers) as HSG. Make no mistake, distressed debt hedge funds are not debt collectors. They are not harrasing, or calling on a daily basis. They are trading debt all over the world and making a profit for large pensions and endowments that invest in them. Remember, we are talking about $100 million dollars! Not a $10,000 credit card bill. Get real guys, this is the big leagues.

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"Hammer" = Monarch rep
written by Tom Swift, January 27, 2010

Let us all acknowledge that the post above by "Hammer" is a Monarch rep. Yes, the word "Hammer" would never be used by a predator hedge fund... No, never. Hilarious.

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Tom Swift = Clueless
written by Hammer, January 27, 2010

No, I dont work for Monarch...but I trade this paper all day long on Wall Street. I think it is clear Tom has no clue how hedge funds work.

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