Barclays Center Refinancing Saves $90 Million for Prokhorov

  • Proceeds used to retire debt sold in 2009 yielding 8 percent
  • Revenue bonds maturing in 2042 priced to yield 2.88 percent

Mikhail Prokhorov, the Russian-born billionaire owner of the Brooklyn Nets and the Barclays Center, refinanced almost $500 million of the arena’s debt, saving $90 million.

Charles Mierswa, chief financial officer of the Nets and Barclays Center, said the amount is based on present value savings, or the current worth of a future steam of cash flows. Investors placed orders for almost 10 times the amount of bonds available, he said.

Goldman Sachs Group Inc. managed the sale. Barclays Plc and Siebert Brandford Shank & Co. served as co-managers.

The largest piece of the deal, $228.5 million of uninsured bonds with a 5 percent coupon maturing in 2042, was priced to yield 2.88 percent. The debt, which is callable in January 2027, yields 1.44 percentage point more than top-rated debt of the same maturity, according to data compiled by Bloomberg.

The bonds, which were issued by the Brooklyn Arena Local Development Corporation and are backed by payments in lieu of taxes, will refinance debt issued in 2009 at a top yield of 8 percent.

For more on the sale, please click here.

“The overwhelming positive investor response to this bond offering demonstrates the market’s confidence in the leadership of Barclays Center and the operations of the venue,” said Brett Yormark, chief executive of Brooklyn Sports & Entertainment, in an e-mailed statement.

The 17,732-seat arena, which is also home to the National Hockey League’s New York Islanders, will generate operating profits of $46 million before paying debt service in 2016-2017, according to the preliminary offering statement.

Prokhorov, who has a net worth of $10 billion, according to the Bloomberg Billionaires Index, completed his acquisition of the National Basketball Association’s Nets and the arena from developer Bruce Ratner’s Forest City Enterprises Inc. in December 2015.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE