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Sunday, May 29, 2011

Reports are not accurate about Einhorn's deal with Mets, New terms disclosed

According to a report in the NY Daily News , Einhorn is structuring the deal so that he is in effect assuming the $100 million in debt as a protection in the event of a judgment against the Mets' owners in the hotly contested Madoff litigation.

His investment, therefore, would not be subject to a claim of assets by the bankruptcy trustee, Irving Picard, although if the Wilpons do end up with a favorable ruling in the Picard case,

Einhorn's $100 Million in debt will then become equity. The other $100 million is expected to go toward repaying a $25 million loan to Major League Baseball and to cover an estimated $70 million in operating losses for the team this year, which will allow the Mets to restructure debt to help cover operating costs.

If Einhorn does exercise his option to increase his investment to a majority share - believed to come into effect in about five years unless a Madoff judgment would come sooner - Wilpon and Katz can block him and retain control of the team they have owned for three-plus decades by buying out Einhorn, at which point his one-third percentage in the team would be decreased by nearly half, or about 16%-17%. The source described the buyout as being at "an unfavorable price to the Wilpons and Katz (conceivably close to the $200 million investment)."

Reports Saturday that Einhorn has a three-year option to up his stake to 60% but could be stopped if the Wilpons and Katz repaid his entire $200 million investment and that he would still get 33% of the team are not accurate, according to multiple sources.
"This is an investment in the team, not a loan," one source said of the deal, which is expected to be completed in June. "He's not getting a third of the team for free."
The Mets released a statement Saturday addressing those reports. "While we have entered into an exclusive negotiating agreement with Mr. Einhorn, there is uninformed speculation regarding terms of a potential deal," the statement said. "The details of the actual negotiations are strictly confidential."

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