The Texas Rangers baseball team, which was moving ahead with a proposed sale of the club, reversed course and agreed to put its assets on the block as part of a bankruptcy auction.
The Rangers asked a judge to set a July 16 auction to ensure the highest price for the assets, according to papers filed yesterday in U.S. Bankruptcy Court in Fort Worth, Texas. The chief restructuring officer for the team’s equity owners “would be more likely to support” its bankruptcy plan, which is based on a sale, if there’s an auction, the Rangers said.
After filing for bankruptcy in May, the Rangers sought court permission to sell the team to a group led by Chuck Greenberg and Nolan Ryan without an auction, in a transaction the team valued at $575 million. A bankruptcy judge ruled last month that the equity owners must support the Greenberg-Ryan deal before it can win court approval.
A mediation session was scheduled to begin this afternoon among several parties involved in the bankruptcy case. Snyder, a managing partner at CRG Partners in Dallas, said the mediation may last all week.
“These things rarely settle in half a day,” he said.
The team’s request for an auction comes after lenders led by JPMorgan Chase & Co. called for a competitive sale process as part of the bankruptcy case. They said the Rangers passed on a higher offer from Houston businessman Jim Crane.
George Postolos, a spokesman for Crane, declined to comment on whether Crane was interested in participating in the auction.
Under the bidding rules, which require court approval, the Greenberg-Ryan group would act as the lead bidder if rival bidders come forward, according to court papers. The group would receive a $15 million breakup fee if it is outbid. Bidders must obtain approval from Major League Baseball to participate in the auction, according to court documents.
The Greenberg-Ryan group said in a statement that it agreed to the auction to overcome efforts of lenders “to extract additional payments by delaying the team’s exit from Chapter 11.” The group said it has financing in place for the purchase and is ready to complete the deal.
“Our group was selected last December after an extensive marketing process because we put forward the strongest bid,” Greenberg said in the statement. “Today, nearly seven months later, our bid is still superior and best serves the interests of the Rangers and their lenders.”
Adam McGill, a spokesman for a group of lenders, declined comment.
The case is In re Texas Rangers Baseball Partners, 10- 43400, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).