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Post reports Prokhorov deal for Nets/arena slowed by league rule; Forest City noncommittal; capital call postponed until end of year

A deal is apparently brewing between the Forest City Enterprises-controlled Nets Sports & Entertainment and Mikhail Prokhorov's Onexim Sports & Entertainment to sell the former's 20% of the Brooklyn Nets and 55% of the Barclays Center operating company, but nothing is finished.

Yesterday, when asked by investment analysts about progress, Forest City CEO David LaRue responded blandly, "We continue to make progress and have discussions."

The New York Post reported yesterday that the deal has been slowed by a National Basketball Association unwillingness to provide a waiver for the league’s $250 million debt cap. (Surely Prokhorov could pay several hundred thousand dollars, but why not use other people's money.)

The deal may be revised, according to the Post, and/or the league may bend, given that its one-size-fits-all rule--a dollar cap, rather than a percentage of value--disadvantages teams like the Nets, purportedly valued at $1 billion. (They lose money, for now, but expensive contracts will expire and TV rights are rich.)

NetsDaily added:
That said, a league source tells NetsDaily there are no "game stoppers" and that the deal is still expected to go through before year's end.
Extending the deadline

Forest City and Prokhorov have nearly two more months to work things out. The 10-Q filed 11/3/15 by Forest City with the Securities and Exchange Commission indicates that, while Forest City in September paid its share of the Nets capital calls for the past two seasons, it has until 12/28/15 to pay its share of the current capital call:
The Nets and Barclays Center
Our ownership interest in the Nets and Barclays Center is through our consolidated subsidiary Nets Sports & Entertainment (“NS&E”). NS&E owns 20% of the Nets and 55% of Barclays Center. We own approximately 62% of NS&E, with the remaining 38% of NS&E being owned by minority partners.... During 2014, we began discussions with several interested parties for the potential sale of our ownership interests in the Nets. Through those discussions, certain parties have also expressed interest in acquiring all or a portion of our ownership interests in Barclays Center. In the event of a sale of our ownership interests, NS&E would be entitled to the remaining cash proceeds after assumption of our proportionate debt, which approximates $50,000,000 related to the Nets and $350,000,000 related to Barclays Center. We have also made certain loans to the minority members of NS&E and such loans are required to be repaid to us prior to the minority partners of NS&E being able to participate in the distributable cash flow from any sale. At September 30, 2015, approximately $260,000,000 of priority member loans and related accrued interest remain outstanding. Any remaining cash flows after satisfaction of the priority loans would be distributed in accordance with the legal ownership of NS&E (approximately 62% to us and 38% to the minority partners).00
During the nine months ended September 30, 2015, we continued to discuss the disposal of NS&E’s ownership interests in these two assets. We have not entered into any binding agreement for the sale of these ownership interests and cannot give assurance that we will close on the sale of a portion or all of these ownership interests on terms favorable to us or at all.
During 2013 and 2014, we did not fund the Nets capital calls related to the 2013-2014 and 2014-2015 NBA basketball seasons, respectively. This did not constitute a default under the agreements related to our investment in the Nets because, in 2013, NS&E entered into a forbearance agreement with the majority partner. Under the forbearance agreement, the majority partner agreed to fund NS&E’s portion of Nets capital calls through July 12, 2015 (subsequently amended to September 8, 2015) and forbear the majority partner’s right to dilute NS&E’s ownership interests in the Nets through the forbearance period in exchange for a fee. Upon expiration of the forbearance agreement on September 8, 2015, NS&E repaid the majority partner $26,800,000 related to the 2013-2014 and 2014-2015 NBA seasons and extended the due date related to the 2015-2016 NBA season capital call to October 31, 2015 (subsequently amended to December 28, 2015). As a result of the funding, NS&E recognized $36,842,000 of losses related to its ownership interest in the Nets during the three months ended September 30, 2015.