Thursday, April 15, 2010

ESDC says it has no specific allegation regarding Prokhorov, notes that Ratner remains obligated to construct arena

I got a response yesterday from the Empire State Development Corporation (ESDC) to questions regarding charges by New Jersey Rep. Bill Pascrell that prospective Nets owner Mikhail Prokhorov had violated sanctions in Zimbabwe.

I also asked whether the ESDC had ever officially approved Prokhorov's role and conducted any investigation into him.

"ESDC is unaware of any of the specific allegations, or facts, in this manner and therefore cannot respond to questions," responded spokeswoman Elizabeth Mitchell. "We also choose not to respond to hypothetical investigations and determinations."

Prokhorov sale anticipated

"As part of the December 23, 2009 Master Closing, ESDC did recognize that the team might be sold to an entity controlled by Mr. Prohkorov – subject to review and approval by the NBA," she added. "We expect that Mr. Prohkorov will be approved by the NBA and that the team will be sold to Mr. Prohkorov in accordance with the terms of the sale agreement. Regardless of any such sale, the obligation to construct the arena will remain with Forest City Ratner (acting through their affiliates)."

Presumably had Prokhorov agreed to buy 51% of the arena, rather than 45%, it would have gotten more complicated.

While Forest City Ratner and its affiliates--but not Prokhorov's entities--are signatories to the Development Agreement, Forest City Ratner's success depends crucially on closing the deal with Prokhorov to buy 80% of the team and his share of the arena.

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