Monday, January 28, 2008

EIG scraps 'Plan B,' Katz bid all but a done deal

Can't write much as I'm on the clock right now, but Katz's offer looks to be now all but a done deal with the EIG stated today that the so-called "Plan B" to scrape together funds for a counteroffer is officially off the table.

From the Journal, via the National Post:

The so-called Plan B proponents have thrown in the towel and the sale of the Edmonton Oilers to local billionaire Daryl Katz is all but guaranteed.

A fax was sent to all 34 members of the Edmonton Investors Group this afternoon, taking the Plan B option off the table. There will be no attempt made by a core group of EIG investors, including Gary Gregg and Jakob Ambrosius, to raise the necessary millions to buy out their fellow shareholders who wish to sell. As well, Katz's deadline for closing the sale has now been extended to Feb. 5 from Jan. 31.

A Sunday meeting between Katz Group lawyer John Karvellas and two board members of the Edmonton Investors Group, Brian Nilsson and chairman Bill Butler, precipitated this development. According to the fax, Karvellas said the summit meeting was spurred by a weekend telephone call from National Hockey League commissioner Gary Bettman to Butler.

However, according to an EIG source, the shelving of Plan B had more to do with the fact Katz bumped his offer to $22,000 per share for a net tax equivalent of $200 million. The new bid, forwarded through an intermediary last Wednesday to at least one holdout shareholder, represented a 6.3-per-cent increase over Katz's fourth offer of $20,687 per share for an equivalent of $188 million.

"The extra money, frankly, was the backbreaker for Plan B," said an EIG investor who has already agreed to sell to Katz. "He broke the backs of the guys trying to raise the money. They have agreed not to proceed with Plan B. They have agreed to negotiate only with Rexall Sports. And we now have until Feb. 5 to get it done."

Interesting stuff. I wonder what Bettman had to say to Butler about all this?

26 comments:

David S said...

Not sure what Bettman had to say, but I can tell you what Katz said...

"Checkmate".

garnet said...

But I thought they were looking for a location guarantee. Funny how those sort of allegedly vital considerations go by the boards sometimes.

David S said...

All those conditions were just stall tactics to buy time to put together a counter offer. Once they did, Katz just upped the ante enough to show them that whatever they'd come up with, he'd beat. It was just corporate poker. Except Katz had way more chips.

I'd love it if he called Butler in person and said "And boom goes the dynamite!".

Anonymous said...

Bettman? "Fhucking delicious".

Lord Bob said...

It seems to me that most of this stalling and wishy-washiness was precipitated by the other guys in the EIG trying to get every fucking dime out of Katz when they cash out.

It seems to have worked. $22,000 per share. Very nice. Whatever you want to say about the EIG, they've proven shrewd as hell so far.

David S said...

"Shrewd"?

Over 60% of the shares were agreed to be sold at $20,687 ea.

As a developer, Butler knows all about the debt-financing angle so he gave it a shot. Katz probably had the deal done at $188M, but he wants sole ownership. The additional $12M was just his final move to clear the table. My guess is that $200M was what he was prepared to pay in the first place. Chess, man. Its all about the chess.

Andy Grabia said...

Whatever you want to say about the EIG, they've proven shrewd as hell so far.

It's never been about money, LB. This is a group of the all-time greatest guys in Edmonton history. They've done nothing but enhance that reputation over the past six months. True dat.

Alex said...

Katz will make a great owner, but I think EIG, despite some of them holding out in a less than classy way, should be recognized by the city in some way for keeping the Oilers in Edmonton and out of Houston. Naming a street after them has been done. Other suggestions?

David S said...

Yeah, because they haven't been fawned over enough already by every media source in this town.

Jeezuz!

Lord Bob said...

"Shrewd"?

Over 60% of the shares were agreed to be sold at $20,687 ea.


Oh, well then, that's practically pocket change!

Is "agreed to be sold" not a strong phrasing there? It seems that Plan B was still a viable candidate until Katz upped his offer, after all.

It's never been about money, LB. This is a group of the all-time greatest guys in Edmonton history. They've done nothing but enhance that reputation over the past six months. True dat.

As one of the, like, five EIG fans left on the comment threads, I'd like to suggest that we just rename the city EIGmonton and honour the greatest guys in history the only way they deserve.

Rod said...

Big surprise, Katz' bid goes up, and boom goes the dynamite. So much for the "vision of community ownership" Butler and the EIG kept spinning at every opportunity. I for one am glad we won't be hearing that load of crap anymore.

Katz ownership was pretty much a sure thing from the reports last week. This news removes any doubt. Woo hoo!

Andy Grabia said...

The Sun is reporting that the Plan B group tried to contact Balsillie. Wasn't Butler the same guy who floated the location agreement demand? Classy.

namflashback said...

AG, you know that they are greedy -- so why would a last minute call to Balsillie surprise you? Class has little to do with it. If I was one of the owners, I would have tried every possible method to run an arena deal, pre-sell a block of new skyboxes and seasons tickets AND THEN SELL. Imagine selling the franchise when you had secured the potential of a 25% increase in revenue.


So, in the Katz world, let's contemplate what will change:

Katz is friends with Lowe, so is unlikely to turf him. Only way Lowe goes is if he allowed to load the gun himself. Same with MacTavish. The past two years of crap on ice appear to be part of the "plan."

Things that might have been avoided if Katz was owner.
- Souray, if indeed this was an ownership pressure

Katz will allow cap budgets, but so is this last iteration of the Oilers. He could allow Souray to be bought out -- but LTIR might give the Oilers the cap relief they need anyway.

So, what might change. Well, we know that revenue might increase significantly for the team within the next 5 years (timeline to build an arena).

Sadly, this year (although we can't say about the 06-07 and the Smyth decision) it wasn't money that restricted the Oilers. Not sure how much will change to the Lowe plan under Katz -- other than buyout flexibility.

Note that the CBC cameras panned to the All-Star audience several times -- was that Daryl Katz in the stands?

Maybe some direct recruitment? Although that would be tampering since Hossa is under contract.

On the business side, like it or lump it, LaForge appears to have done a good job. The PR staff of the Oilers could do with getting an education from Katz's PR team.

So, I see LaForge getting a year to prove himself, I see the PR staff getting "adjusted." Not much else will change I think in the near term.

Doogie said...

I'm seeing that picture of Katz looking like Rob Schneider, chuckling as he watches the last remnants of resistance squirming before they realize it's been a done deal for weeks.

Bettman probably told Butler, "If you think the Board's going to approve a sale this contingent on debt financing, you're fucking insane." Or something to that effect.

Strange how Cal Nichols has managed to salvage himself somewhat by capitulating early in this round, while Bill Butler has done everything possible to submarine the reputation of the EIG as an entity. This sports-business stuff really is for the birds.

Eyeris said...

This is all too complicated. I need mike w to draw a cartoon version of this to enhance my comprehension. Please.

Fhucking A.

d said...

Yes, I second the motion for a cartoon to explain this.

Aaron said...

Interesting stuff. I wonder what Bettman had to say to Butler about all this?

How about ... THANK YOU for driving up franchise value.

Black Dog said...

A cartoon is not enough - we may need a video montage I think.

Anonymous said...

Tonight: Oil 5 Shark 3

Oil: Horc, Pit, Staios, Stoll, Cogswell.

Why not ?

David S said...

"A cartoon is not enough - we may need a video montage I think."

Its gonna take alot to top "The hottest man alive".

But another comic? Yeah, I'd buy that!

David S said...

Uhhh..I mean "cartoon". But yeah!

Chris! said...

Alright, getting outshot 31-9 by the second intermission! Are the Oilers *trying* to waste their fans' time?

Pleasure Motors said...

As bad as the Oilers were, Rob Brown's commentary was even worse. I think it's awfully telling that Morley includes the phrases "Obviously" or "it goes without saying" into every second question: it always does go without saying, but that is apparently all Brown is capable of noticing while watching hockey.

Andy Grabia said...

When Nam mentioned the Oilers PR department getting adjusted, the first thing I thought of was the Journal and the Sun. That's not healthy, right?

Rock Deputy said...

Katz is friends with Lowe, so is unlikely to turf him. Only way Lowe goes is if he allowed to load the gun himself. Same with MacTavish. The past two years of crap on ice appear to be part of the "plan."

That's not necessarily true. He could "promote" Lowe up in the organization which would get us a new GM without the nastiness of firing one of the Boys on the Bus.

Though, I'm not sure the same could be done with MacT.

Anonymous said...

I think Bettman told them to get over it and sell. I hope the change of ownership will also bring a change in management, it's embarrasing to watch those two buffoons game after game and getting nowhere fast. Bye McT!!