Post: Prokhorov nearing deal to buy Forest City's share of arena and team for less than long-discussed value
Prokhorov has been in talks to buy the 55 percent of the arena and 20 percent of the NBA team he does not already own. Under the deal being discussed, he would kick in little cash beyond forgiving the roughly $40 million Forest City owes him to cover team losses, according to two sources familiar with the situation.There's a larger business reason for Forest City to sell--the plan for the company to convert to a real estate investment trust (REIT)--but it's surprising how little Forest City would get.
Onexim Group, Prokhorov’s investment vehicle, earlier extended until Sept. 8 a deadline for when Forest City needs to pony up roughly $15 million to cover its share of the Nets’ losses for the 2015-16 season. That’s on top of the $25 million it owes for last season.
Meanwhile, Barclays Center is projected to generate $55 million in annual operating income but has debt of $640 million. That leaves little equity value even at a sale price of 10 times annual operating income.That suggests an overall sale price of $550 million, or $302.5 million for Forest City's share. But the $90 million equity value would result in a 55% share of $49.5 million for Forest City.