Ricketts lines up financing for Cubs deal
Corporate bond dealer Thomas Ricketts is close to finalizing terms of his nearly $900 million purchase of the Chicago Cubs from Tribune Co.
But his friends shouldn't start hassling him for tickets yet. Complications in the process, including Tribune's Chapter 11 bankruptcy, should keep the sale from being approved until the heat of this year's pennant race, if then.
(John H. White/Sun-Times)
Sources said Ricketts has lined up $350 million in bank financing for the acquisition. They said the money is coming from JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp.
All three banks are Tribune creditors because they provided financing for owner Sam Zell's $8.2 billion Tribune buyout. The deal closed in December 2007 and left the company with more than $13 billion in debt just as its newspaper publishing core began seeing major losses in advertising.
The Ricketts have also approached three celebrities, including actors and longtime Cub fans John Cusack, Jim Belushi and Bill Murray, according to the Chicago Tribune.
Zell took Tribune into bankruptcy one year later to wrangle new terms from creditors. He plans to sell the Cubs, one of the most coveted franchises in Major League Baseball, to pay down the debt.
Ricketts and his father, Joseph Ricketts, founder of the Ameritrade discount brokerage, plan to inject $450 million into the deal, sources said. They also said they plan to raise $100 million by selling preferred shares, which include a guaranteed dividend and perks, such as front-row seats and a chance to hobnob with players. But the shares wouldn't include a voice in team management.
Thomas Ricketts, chairman of Chicago-based Incapital LLC, did not return calls Monday and his spokesman declined to comment. The publication SportsBusiness Journal broke the news about his bank financing.
The Cubs sale can't be final until it is approved by 75 percent of the MLB's 30 teams. The owners hold their regular quarterly meeting this week but won't be taking up the sale.
Even if there is an agreement between Ricketts and the Cubs over the next few days, it first has to go to bankruptcy court. The court review is expected to take 30 to 45 days.
The owners could vote on the sale at their August meeting, or they could call a special session earlier.
Ricketts and Tribune have been in tense talks over how to structure the sale. Tribune wants a leveraged deal to reduce capital gains taxes, but Ricketts has wanted to limit borrowing because baseball owners don't like debt-laden acquisitions.