Tuesday, August 9, 2011
Report: Einhorn deal terms modified
By Adam Rubin
David Einhorn remains on track to become minority owner, but the terms have changed slightly to comply with existing loans from banks, according to the Post.
The report states Einhorn will still pay in $200 million. But rather than get 33 percent, he will get 17 percent from the outset.
The original agreement called for Einhorn to have an option to up his percentage to a majority amount in three to five years. That's still true, according to the report. And Fred Wilpon and family can still block Einhorn from gaining that majority share by returning his $200 million -- now in five years. However, rather than go from 33 to 17 percent under repayment by the Wilpons, Einhorn will just stay at 17 percent.
Author Josh Kosman writes:
The bank lending syndicate of the money-losing team, led by JPMorgan Chase, balked at the original terms because it put Einhorn on the repayment line in front of them. Their loans are due in June 2014. ... It is possible the banks will ask Sterling for more cash in a few years to refinance their loan, and that the Wilpons at that time will need to bring in another equity investor, the source said. The banks are fine with a condition giving Einhorn the right to take control if Sterling becomes insolvent, since they want a well-heeled investor running the team and their loans would still be addressed before Einhorn's, the source said. "All interests are now aligned," the source added.