Forest City agrees to pay $26.8M to Prokhorov to avoid seeing share of Nets diluted; what about the other $6.3M?
On the one hand, this suggests that the negotiations to sell NSE&E's 20% of the team and 55% of the Barclays Center to Prokhorov may be hitting a more critical, intense phase. After all, Prokhorov presumably could have extended the debt again, as he did in July and August.
On the other hand, the $26.8 million seems less than previously required. As reported last month, NS&E was required to repay Prokhorov two sums. One was approximately $25 million plus related fees--which presumably means $26.8 million.
Forest City Enterprises, Inc. announced today that its subsidiary, Nets Sports & Entertainment (NS&E), made a $26.8 million payment for capital calls and fees related to its ownership interest in the Brooklyn Nets. The payment covers NS&E's share of team losses plus fees for the period of July 13, 2013, through September 8, 2015. The company had previously announced that a forbearance agreement related to the payment had been extended through September 8.
Commenting on the payment, Forest City President and CEO David J. LaRue noted, "We have chosen to make this payment to preserve NS&E's 20 percent ownership interest in the team, rather than suffer dilution which would reduce that interest to approximately 8 percent."
The funding of the forbearance payment does not impact the company's previously disclosed intention to seek a sale of its interest in the Nets, and it remains in active discussions with interested parties for a potential sale. There can be no assurance that the company will close on the sale of a portion or all of its ownership interest on terms favorable to it or at all.
NS&E is the consolidated subsidiary through which Forest City holds its ownership interests in the Nets and the Barclays Center arena. NS&E owns 20 percent of the Nets and 55 percent of Barclays Center. Forest City, in turn, owns approximately 62 percent of NS&E with the balance owned by minority partners.