Dodgers owner Frank McCourt announced Thursday that he has borrowed $250 million against Dodger Stadium and its surrounding real estate to repay loans used to buy the team from News Corp. subsidiary Fox Entertainment Group.
In addition to paying down existing debt, the private placement by L.A. Real Estate LLC, the holding company that owns the property, is contingent that "there will be no change in control of the Dodgers or where they play for 25 years," according to a statement released Thursday by the Dodgers.
The clause essentially stamps out rampant speculation that McCourt, a Boston developer, bought the Dodgers two years ago as part of a real estate ploy to move the team out of Chavez Ravine in order to build expensive hillside housing on the site.
The transaction, arranged by Banc of America Securities, involves a private placement to a group of unidentified U.S. institutional investors in long-term senior notes at a 5.66 percent fixed annual interest rate. XL Capital Assurance Inc. issued a triple-A rated financial guarantee of the notes.
In the statement, McCourt said the private placement reflects the value of the assets and confidence in his ability to turn around the finances of the Dodgers, which were losing more than $50 million a year at the time of the purchase.
"Our ability to design and secure new capital structure of this magnitude on such favorable terms represents an enormous vote of confidence by the financial community," McCourt said.
McCourt intends to use the private placement to pay off $150 million in short-term loans from Bank of America and $71 million in financing from News Corp. that were used in his $421 million acquisition of the team.
Peter Chernin, News Corp. president and chief operating officer, said in the Dodger statement that McCourt "justifies our belief in his ability to build upon the unique legacy of the Dodgers."
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