Wow every time I hear more about this sale.. "till man" is more like "shell man" So get this - "Shellman fertita" is buying this whole deal on credit. What is he actually putting up himself? What is his liability here? Anyone..anyone? This is like having a 1k car note and making 30k a year. Somethings gotta give and that will be the rockets i suspect. I hope im wrong and this little greaser can use his open ticket to money launder this bad boy into max on luxury tax and winning. Maybe this isnt all bad? I wish we had a real billionaire with real money. To be clear as I follow he is getting 275 million loan from les and getting another loan for 1.4 billion through bonds What if he cant sell the 1.4 in bonds? How does this sh*it work Ive never borrowed 2 billion before. Can I issue your ass some bonds? Can someone smarter please explain? I guess thats the problem right? I dont have the nads to borrow 2 billion ..or blow it off trashing my favorite team. Im shocked nba owners would let this slide "When companies need to raise money,issuing bonds is one way to do it. A bond functions like a loan between an investor and a corporation. The investor agrees to give the corporationa specific amount of money for a specific period of time in exchange for periodic interest payments at designated intervals" https://www.forbes.com/sites/mikeoz...rtitta-is-paying-for-the-houston-rockets/amp/ " How is Tilman Fertita paying $2.2 billion for the Houston Rockets when he and his businesses have less than $300 million of cash? By selling $1.415 billion worth of bonds. According to Law360: “Casino and hotel operator Golden Nugget Inc. announced Wednesday that it had priced a $1.415 billion notes offering and that it will combine its casino operations with those of restaurant chain operator Landry’s Inc., joining the two companies, which are both owned by a Texas billionaire.” The bonds are not cheap. PR Newswire says: “The Senior Notes will be issued under the indenture, pursuant to which Landry’s initially issued $600 million in aggregate principal amount of its 6.750% senior notes due 2024 on October 4, 2016 (the “Existing Senior Notes”). In connection with the Reorganization, Golden Nugget will become the issuer under such indenture and will assume the Existing Senior Notes as Golden Nugget’s obligations. The Senior Notes will have identical terms, other than issue date and issue price, and will constitute part of the same series as the Existing Senior Notes.” The bond sale will be used for the $1.75 billion of equity Fertitta is using to buy the Rockets, along with $175 million of assumed debt and a $275 million loan from Leslie Alexander, the seller of the NBA team. Should be interesting to see how the bond sale goes."
So rather that selling assets, like stock, he is issuing more corporate bonds from Landrys/Golden Nugget. Dude has a lot of confidence in his businesses, that's for sure. So, has he sold them yet ! Lulz I guess he's Issued bonds before per Forbes to expand Golden Nugget in 2016 One of my theories before was Les might be testing with the market. He might actually not think this will finalize, But the Tilman bid helps him establish market. "Like, sure buddy. See if you can sell those corporate bonds, I'm rooting for you. Let's put out this press release for $2.25b now, though, OK" I don't think this is going to finalize.
heypartner, remember when several of us were at the Golden Nugget during Summer League years ago? Tiltitta has guts for sure. I mean, he even bought one of Trump's failed casinos in Atlantic City. Right now, it sounds like that Tiltitta is going to pledge his restaurants and casinos, and not the Rockets (as would be in a classic leveraged buyout), as collateral to purchase the Rockets. This is probably because the NBA has rules and limits on borrowing against team assets. But then this may still mean that Tiltitta is going to care very much about how much profit he generates from the Rockets rather than treating it like a toy like the Paul Allen and Steve Ballmers of the world can afford to. Will need some of the extra Rockets profit to pay off the Landry's debt. Would be interesting to see if he is willing to go all in with luxury tax payments and such.
lulz -- Moody assigned Tilman's bonds a B2 Rating "Outlook Negative". Tilman is already paying around 6.75% interest, per Forbes, for current bonds, and seems it will be more now. Compare that to something like 2% for a longterm treasury bill. fwiw: Rockets value increased by double Tilman's rate per year under Les...like 13-14%/yr. Moody's assigns B2 CFR to Golden Nugget (New); outlook negative https://www.moodys.com/research/Moo...Golden-Nugget-New-outlook-negative--PR_372332 Global Credit Research - 07 Sep 2017 New York, September 07, 2017 -- Moody's Investors Service, ("Moody's") today assigned Golden Nugget, Inc. (New)("GNI") a B2 Corporate Family Rating (CFR) and B2-PD (PDR). Moody's also assigned a Ba3 rating to GNI's proposed senior secured term loan, a B3 to the proposed senior unsecured notes and a Caa1 to the proposed senior subordinated notes. The rating outlook is negative. GNI recently announced that it plans to reorganize its business and recapitalize its balance sheet. This encompasses GNI assuming all of the assets and operations of Landry's, including approximately $1.9 billion of debt as well as the inclusion of Golden Nugget Atlantic City and Golden Nugget Biloxi into the credit group. As part of the recapitalization, GNI will also issue approximately $2.5 billion of new debt with proceeds used to repay about $800 million of Golden Nugget, Inc. (Golden Nugget) debt currently outstanding, pay a $1.6 billion dividend to ownership, $44 million of accrued interest and $60 million of fees and expenses. The change in outlook to negative reflects the increase in leverage (to approximately 7.2x) as a result of these transactions. The outlook also reflects the various challenges that could limit the company's ability to reduce leverage towards 6.0 times by the end of 2018. Moody's ratings and outlook are subject to receipt and final review of documentation. Upon successful assumption of Landry's existing debt by GNI, its senior secured bank debt will be rated Ba3 and the senior unsecured notes will be rated B3. Moody's anticipates that all of the corporate and instrument ratings at Golden Nugget (predecessor) and Landry's will be withdrawn upon the completion of the proposed transactions and repayment of existing debt. Here's the chart of Bond ratings and what they mean
I'm not a sports investment banker, heypartner (is there really such a thing? Is it an investment banker with an interest in investing in sports? There are sports investment banks? I had no idea), so pure speculation on my part. I think if there is one thing Les knows, it's how to make money. There had to be an upside for Alexander to loan Fertitta $275 million, in my opinion. It would shock me if Les came out the worse for wear in any aspect of selling the Rockets. The upside could simply be getting a $2.2 billion dollar deal closed, but $275 million isn't chump change. I've been shocked before, of course. When Charlie Thomas traded Moses to the 76ers for what I consider peanuts because Thomas didn't want to pay him, I was shocked. He didn't want to pay Malone around $13 million, with incentives, for 6 years. That's not per year. That was for the length of the 6 year contract. We're talking about a 2 time MVP, as you know. That was in 1982. Charlie bent over for Howard Katz without the benefit of a reach around in one of the worst deals in NBA history, in my humble opinion. Ironically, in a way it was a similar situation to what's happening today, best I can tell, at least in one aspect. Thomas was in the process of buying the Rockets from Gavin Maloof.
yeah, we learned that in early links in this thread. (I think in this thread.) They specialize in the sports industry, and love to finance purchases of teams, and probably stadiums, too. Not sure what else....TV deals? btw: imo, the ~7% interest Tilman is likely to pay on his corporate bonds screams out that the investment banks won't give him a better rate. Seems like another buyer will jump in, as I have to believe the banks could do better than 7% on an NBA franchise for someone with more liquidity who doesn't need to borrow everything.
Maybe Fertitta is just helping Alexander out by setting the benchmark price for him. I just don't see how the NBA is going to approve this sale.
It's funny though his show on CNBC, Billionaire Investor, runs promos on the network promoting the show, but they start out with saying Tillman is owner of Houston Rockets....
That was one of my original guesses, too. But he's actually issued the corporate bonds. That's quite a commitment to just fake a purchase. But, I do believe that Les might just be going along with it to set the market price, without really believing Tilman will get the OK from the league, or sell all those bonds.
If anything you should be happy he is buying it with credit. That means he has a whole lot of cash flow for operating expenses if he needs it. He got the team and has money in his pocket, seems like a smart man to me. Here is a shocker, most business owners take out loans to start their business. Don't be jealous that he can get up to 2 billion dollars credit line.
I know the plan by Uncle Le$$$ Sell the team at an all time high, watch tinman Fertitta bring the value down and then buy back the team for like $1.25 billion and become the owner again
Actually in my opinion 7% is a very low interest rate. I think the NBA is nearing its peak in revenues. They will probably lose some US market as the up and coming generations shift towards other interests. Now on the upside they can market globally like never before. On the downside is the markets that would actually pay them and not just rip off their product illegally isn't as huge as it could be. European basketball won't be taken over by the NBA. Either way I think 7% is a very solid interest rate depending on what type of interest rate it is.
