Thursday, October 08, 2009

Prokhorov says his Nets investment is no money down, all borrowed funds

There's a little bit lost in translation, but the headline is clear: Prokhorov Says Nets Will Make Profit in 2011-12, reports the Moscow Times.

Russia's richest man expressed no doubt that legal challenges would be overcome. But the big news is that Prokhorov revealed his game-changing (to Bruce Ratner) investment comes with little sacrifice.

The Moscow Times reports:
Prokhorov said that while Onexim Group has sufficient funds, it might raise the financing required from Western banks. The New York Times reported Sept. 25 that the agreement also envisioned future Nets losses, up to $60 million, that are expected to accumulate before the move to Brooklyn. Prokhorov also will be responsible for 80 percent of the team’s $207 million debt, the newspaper said, citing an unidentified executive involved in the transaction.

Prokhorov declined to provide details about the deal.

“We borrow the money and essentially give the loan to someone else,” Prokhorov said. “For that, we get the team and a share in the real estate project. To use simple language: the group doesn’t spend any of its own money.

“We are in the process of negotiating with Western banks,” Prokhorov added, declining to identify the banks or disclose the interest rate of the loans. “We will attract the full sum of the needed investment.”

Lost in translation

The newspaper reports:
[T]he development is to include a rail yard, warehouses and several high-rises containing residential and office space, and the first high-rise is expected to be completed 69 months after the ground is broken, which, barring legal hurdles, is to take place this year.

There would be 16 (announced) towers, but no warehouses. The first tower would begin six to nine months--not 69 months after arena construction starts, according to the New York Times.

1 comment:

  1. If Prokhorov can borrow money from western banks, why does Ratner need him? Is Ratner unable to borrow money from western banks, or does he just want to be out of the Nets ownership entirely, or was he told by Cleveland headquarters that they are sick of the loses on the basketball team?

    ReplyDelete