[ruh-oh] Restaurateur Tilman Fertitta Desperately Seeks Cash Infusion For His Hospitality Empire

shut up and sell!

 

someone will lend him the money - his assets are too great.

DD

 

Maybe you can, Balla.

 

When you say "debt load," are you talking about GNI's debt load, or the Rockets. Those are two separate businesses. What is the "debt load" of the Rockets?

 

I agree. And the 15% instrument he is offering comes with first claim on assets should GNI go into bankrupcy ... per the Bloomberg report.

 

Good points. Compare to myself.
if I have big loan, I am worried about cash flow all the time. I have to save as much money as I can.

Few people know the loan balance of Les and nba league.

 

The question is if Tilman is under pressure to sell. If he is looking at loans for 15% to keep his empire afloat, and he is in that much debt - the NBA can step in and buy the Rockets from him at a fair price that solves his situation vs him trying to fire-sale now which is bad for everyone, fans, NBA, and Tilman included. But I don't know if Tilman will want to sell since he seems pretty narcissistic.

Different circumstances because the Hornets/Pelicans at the time was losing money badly. The Rockets are a profitable team, it's just that the owner is in a sticky situation.

 

I thought the report said the encumbered assets were some online gaming subsidiaries of GNI, not GNI itself or Fertitta personally?

 

Are they though, after payments on the debt + interest for the 1.415 billion USD bonds Fertitta issued to get the money to buy the Rockets in the first place? Someone upthread already crunched the amount of money required per year to redeem those bonds and interest. Off the top of my head and cocktail napkin, the payments per year to redeem a 2024 maturing bond of 745 million at 6.75%, and a 2025 maturing bond of 670 million at 8.75%, is in the hundred to hundreds of millions of dollars per year. (Figures from:
https://www.forbes.com/sites/mikeoz...urchase-of-houston-rockets-have-fallen-behind)

Then there's the loan to Les. That's a lot of money before profits.

 

I don’t think he has enough assets to redeem the bonds, Can he re negotiate?
I think he can exchange the Landry’s assets to redeem the bonds if those loan is small and can pay off.
I would guess he still owe Les 200 million dollars.

 

LOL..what he said? Did he say "owner in trouble?"

 

The Rockets are profitable, but it might not be enough to cover the borrowing costs used to buy the team.

You can buy a profitable business but lose money on it if you borrowed so much money to buy it that the interest wipes out your gain. That doesn't mean the business is losing money. It means the owner is losing money.

 

It is Fertitta's debt load. The bonds that he sold under the Golden Nugget name are Fertitta's to pay. I realize that the Rockets are somewhat walled off from the Golden Nugget umbrella, but I don't know if it is an impregnable wall or more like the Maginot Line.


https://www.restaurantbusinessonlin...ers-pay-15-interest-lifeline-loan-report-says

I posted this last week

Now I will add in the $300 million that was drawn down on the credit facility for his holding company and the $200 million in debt that he picked up in January that possibly was to settle the debt owed to Les Alexander. I will use a very lowball interest rate of 3% and no compounding.



Type of Debt.........................Principal..…........Interest Rate ….....Interest..
Golden Nugget Bond.......$1,345,000,000 …....... 6.75% …....... $90,787,500
Golden Nugget Bond..........$670,000,000 …....... 8.75% …....... $58,625,000
January Debt.......................$200,000,000 …....... 3.00% …..........$6,000,000
Holding Company Debt......$300,000,000 …....... 3.00% …......... $9,000,000
Lifeline Loan........................$250,000,000 …......15.00% …....... $37,500,000
=============================================================
Total...................................$2,765,000,000 …...........................$201,912,500


That works out to just under $4 million a week in debt service. Nothing is being set aside to actually start paying down
the debt owed. The above should be considered a conservative projection because Fertitta/Golden Nugget may have some other loans and debt to suppliers that haven't been disclosed. Since he doesn't have to release information on the same level as companies listed on stock exchanges, there is quite a bit of mystery involved projecting what is going on with Fertitta and his business empire.

If things don't work out as well as Fertitta projected and he needs more money in October for debt service, he might not be able to find it because the lending market has already gotten very cautious since the recent loan at 15% isn't friendly.

Would Fertitta actually let his restaurants and casinos go into some type of distress - bankruptcy situation just so he can keep the Rockets?

Would the other team owners be happy with Fertitta letting the rest of his business empire crumble just so he can keep the team?


In the NBA Constitution and Bylaws, there is Article 12 (starts page 24) which covers the Bankruptcy of a Member. Maybe It could be argued on a technical - legal basis that a bankruptcy of Golden Nugget isn't exactly a bankruptcy of Fertitta, but the NBA might not care and start leaning on him to sell the Rockets. The league pushed Sterling to sell when things got ugly and perhaps they also pushed the Maloof brothers to leave when they were struggling financially.

 

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In March, Tilman net worth is 3,2 million. The loan he disclosed for Golden Nuggets is 2.6 billion and he has NBA related loans.
I worked in Hotel chain a few years ago, I can easily tell Tilman has at least 100 other loans that are not disclosed, such as construction loans, Affiliates loans,.....

Tilman assets are likely under water By the end of the year.

 

Lakers, Clippers and GSW want to keep Tilman because he has no cash to compete for championships.

10 small market teams want him to sell to rich so that they can enjoy sharing 300 million luxury tax profits a year. Tilman has no cash to pay luxury tax.

 

Cuban and the host were explicitly talking about Tilman, but the he went on to say, I know a sports owner whose worth was about $2b pre-pandemic and now is worth low hundreds of millions.

 

According to Sports 610 Radio, Tillman only put $300 million of his own money, borrowed $275 million from Les and used 71% of his assets to purchase the Rockets. That is an extremely high leverage purchase. Even if the lockdown is lifted, the economy opens up and him able to secure a loan, I do not see people rushing to his restaurants and casinos especially when people are losing jobs and with existing corona scare. Hospitality sectors are worse hit during a recession. Probably best is to sell the Rockets if he wants to save his hospitality empire or at least part of it. But considering current financial stress, I do not see how anyone would be willing to put a value of $2.2 billion or higher for the Rockets franchise at this stage.

 

Maybe. But he is certainly related, and I bet he is either one of Tillman's sons or his sons best friend who has hung out with them forever.

Look how much he's stretching the truth, it's ridiculous. The only other explanation is he's paid to do this, but if someone were paying they'd expect better content than this.