Wednesday April 16, 2003
Slam! Sports reports that lawyers for the Ottawa Senators hope to score nearly $4 million US more in interim financing Thursday to keep the cash-strapped NHL club playing through to early June.
The latest cash request comes as a potential sale of the money-losing team is becoming less certain.
While Toronto billionaire Eugene Melnyk is believed to be the only current bidder in negotiations to buy the near-bankrupt team, he missed an April 11 deadline to make a binding offer and pay a deposit on the bid.
Melnyk, chief executive of pharmaceutical giant Biovail Corp., said Wednesday he is "cautiously optimistic" about the prospects of a sale, a less enthusiastic tone than he has offered in the past.
Recent reports indicate only Melnyk is now negotiating with the team's creditors, and sources have said his advisers view the Senators as a very poor financial investment and may be trying to convince him to walk away.
"We continue to work with the (court-appointed) monitor who in turn is working with the various stakeholders," Melnyk said in an e-mail to The Canadian Press on Wednesday. "I remain cautiously optimistic that my bid could be accepted but first the various creditors have to work out their own issues.
"In the meantime, I certainly don't miss a minute of any Sens games," he said of the team, which entered Wednesday night's game on the road against the New York Islanders up 2-1 in the best-of-seven Eastern Conference series.
A source close to the team said the Senators will ask in court Thursday for another $3.9 million US in interim financing, which would bring the total amount of money the team has borrowed from lenders to $21.4 million US.
In February, a court approved $17.5 million US to the club in interim cash, known as debtor-in-possession financing.
The source said the club -- which lost about $24 million Cdn in the eight months ended Feb. 28, nearly twice originally budgeted estimates -- needs the additional cash to make its day-to-day payments.
Those upcoming payments do not include player salaries. NHL players collect paycheques during the regular season but are not paid during the playoffs.
The source said court approval of the extra interim financing should be a sure thing.
Far less certain is the team's potential sale, which at this point may involve only Melnyk as an interested buyer, even though expressions of interest were also said to have been submitted earlier this month by New York financier Nelson Peltz and an unnamed Toronto businessman.
Asked if a May 5 deadline to close a sale on the team can still be met, the source said: "I don't think so.
"I don't know how we're going to deal with it," he added, when asked whether a court will set a new target date for a sale.
The Senators entered court-ordered bankruptcy protection from its creditors in January. The team owes about $180 million, while another $210 million is owed by a separate company, Palladium Corp., which owns the Corel Centre that is excluded from the bankruptcy filing. The court protection expires Thursday, necessitating the return to court.
Melnyk first announced his interest in the Senators in January and re-entered the bidding process for the team after an offer by incumbent owner Rod Bryden collapsed in late February.
While he previously suggested the team and arena were worth about $130 million Cdn, it's uncertain whether Melnyk now plans to make an offer that includes the Corel Centre. New lease agreements on the arena -- effectively controlled by U.S.-based Covanta Energy Corp., its biggest creditor which is also in bankruptcy protection -- need to be settled before a bid on the team can be made.
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