OTTAWA -- The Ottawa Senators failed to pay their players after a refinancing deal fell through.
The deal involved the sale of the team by majority owner Rod Bryden to a limited partnership for $118.7 million, and would have provided cash and a better lease with the Corel Centre.
The terms included injecting $26.7 million into the team and paying off a $9.1 million loan from the NHL.
"The partnership units were fully subscribed but technical issues that could not be resolved prevented completion of the issue," the team said Wednesday night.
"All funds had been held in trust and have been returned to subscribers. Certain potential tax benefits that would have been available to the investors cannot now be delivered, and the transaction has been abandoned."
The Ottawa Citizen reported that players received empty pay envelopes and a letter from Bryden when they arrived at practice Wednesday. Under the collective bargaining agreement, teams have a one-time, 10-day grace period to meet the payroll, but the players were told they would be paid well inside that window.
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| The deal for Senators majority owner Rod Bryden to sell the team falls through.(AP) |
Gordon Fox of Norfolk Capital Partners, which managed the limited partnership, said the deal collapsed because a group of creditors refused to go along with the refinancing.
"There were a bunch of other creditors, all of whom were prepared to proceed, but there was one group that was not," he told The Globe and Mail. "And, without the participation of all of the creditors the transaction could not close."
The Senators, the top team in the Eastern Conference this season with a 23-9-5-0 record, have lost money in each of the past three seasons, including $9.5 million in 2001-02. The team owes more than $101.7 million to a group of creditors and faces continuing cash shortfalls, documents show.
"We're working with Mr. Bryden to see what the next step is going to be," NHL spokesman Frank Brown said.
This is the second time in the last year that the refinancing has fallen apart. On Jan. 2, 2002, Bryden sold the team to the Norfolk partnership for $118.7 million. However, that deal fell apart when Covanta Energy Corp., a U.S. company that is a major lender to the team, filed for bankruptcy protection in April.
The Senators were formed in 1990 for a $50 million expansion fee and started play in 1992.
AP NEWS
The Associated Press News Service
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