PSE offers to buy city claims for $50 million as part of Dewey Ranch sale of Coyotes NHL team

By Caroline Salls

Pittsburgh, Sept. 8 - Dewey Ranch Hockey, LLC potential asset purchaser PSE Sports and Entertainment, LP has amended its offer for the Phoenix Coyotes hockey team and has offered to buy the city of Glendale, Ariz.'s claims against the company for $50 million, according to a Monday filing with the U.S. Bankruptcy Court for the District of Arizona.

PSE, which is led by James Balsillie, said its $50 million offer for the city's claims is more than Glendale would otherwise recover through the bankruptcy process.

If Glendale is willing to sell its claims, PSE said its cash purchase price for the Coyotes would be reduced by $20 million, and that $20 million, plus and an additional $30 million more from PSE, will be paid to the city to acquire its claims, resulting in a $30 million net increase to benefit the estate and the company's creditors.

According to the amended asset purchase agreement, PSE's $212.5 million purchase price would be reduced to $192.5 million if Glendale elects to sell its claims to the potential buyer.

PSE said the open offer to purchase the city's claims takes into account the fact that the Jobing.com arena may need to be used briefly while relocation of the team is implemented.

As a result, PSE said the $50 million payment would cover rent, ushers, custodians, and other payments for arena use, while PSE would pay the post-closing operating expenses of the team, including player salaries.

The arena lease rejection would take effect after the relocation, according to the filing.

PSE has also agreed to extend its deadline for entry of a sale order to Sept. 21 to give the court more time to rule after the Sept. 10 and Sept. 11 hearing.

Under the extension, the National Hockey League would have until Oct. 1 to try to obtain a stay of the sale approval pending appeal, and PSE said it could close on the sale on Oct. 2.

If any order approving a sale to PSE is stayed, PSE said it will set aside $25 million in an interest-bearing account so Dewey Ranch's unsecured creditors will recover the time-value of money when the court's decision is upheld.

PSE has also agreed to protect the unsecured creditors by indemnifying up to $10 million of their damages, but not more than 100% of the non-subordinated unsecured claims, in the event of a reversal on appeal.

As previously reported, the NHL has fought the proposed sale of the Coyotes to PSE and attempted to block relocation of the team to Ontario.

Dewey Ranch and Arena Management Group, LLC, Coyotes Holdings, LLC and Coyotes Hockey, LLC are the owners of the Phoenix Coyotes NHL team. The owners filed for bankruptcy on May 5. Their Chapter 11 case number is 09-09488.

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