I believe the gist of that report is here:
Monday, April 20, 2009, 2:04pm CDT
Hicks Sports Group's problems date to last summerDallas Business Journal - by Daniel Kaplan SportsBusiness Journal
A federal bank regulator last summer, before the credit markets imploded, downgraded the $515 million of debt carried by Hicks Sports Group, which owns the Texas Rangers and Dallas Stars, financial sources said, signaling that the problems at the financially troubled company predated last month’s loan default.
HSG failed to make an interest payment on March 31. While tight credit markets are a major factor in the inability of team owner Tom Hicks to get banks to relax loan terms, HSG’s problems were festering before the economy tanked last fall, the financial sources said.
Last summer, the Office of the Comptroller of the Currency downgraded the loans to nonperforming, sources in the HSG bank group said. The OCC conducts periodic reviews of syndicated loans on bank balance sheets, known as Shared National Credits.The OCC declined a Freedom of Information Act request by this publication to see the downgrade, saying loan actions were not public information. A Hicks spokesman declined to comment on the downgrade.
An OCC downgrade to nonperforming means “the borrower is highly unlikely to support the underlying obligation,” said Irwin Kishner, chairman of the corporate practice at New York-based law firm Herrick Feinstein. As part of its mandate to regulate banks, Kishner said, the OCC reviews loans at banks and, as with the case of HSG, can judge them to be in trouble. That means the banks in the syndicate have to set aside more cash to cover potential losses.
Hicks has been funding operating losses for HSG’s teams out of his own pocket at least since the summer and likely far longer. Like many wealthy owners, the stock market declines have eaten into his fortunes and have made him more reticent to continue covering his teams’ red ink.
In a statement, Hicks said he voluntarily missed the interest payment to force the lenders to allow him to tap an interest reserve and to modify covenants.
Already having had to set aside cash because of the OCC downgrade, twinned with the clenched credit markets, the banks are unlikely to greet Hicks’ pleas for leniency with much sympathy.
“It’s one of the more foolish moves I have ever seen,” said one banker from a bank in the loan group who requested anonymity because he was not authorized to speak, of Hicks voluntarily defaulting on the loan.
Financial institutions in the syndicate include JPMorgan Chase and Galatioto Sports Partners. A spokesman for JPMorgan did not return calls. GSP declined to comment.
One banker not in the bank group suggested that what Hicks might be trying to do is force the banks to sell the loans at a discount, and he could then swoop in to buy them. But Hicks also has nearly half of each of the Rangers and Stars on the market and may be just trying to buy time to raise the money to pay off the debt.
Hicks’ half-ownership of Liverpool FC is not housed in HSG.
At the end of the month, the banks could move to foreclose on the teams if they do not reach agreement with Hicks. To do so, however, would require going through the leagues, which historically have been opposed to banks taking possession of teams.
The NHL referred questions to the Stars. MLB executives declined to comment.
http://www.bizjournals.com/dallas/stories/2009/04/20/daily10.html