CHICAGO -- A Minneapolis official said on Friday the city is preparing to go to market Dec. 13 with $86 million of bonds to finance a public buyout of the Target Center stadium.
The deal would transfer ownership of the center, home of the Minnesota Timberwolves basketball team, to the Metropolitan Sports Facilities Commission, a board that represents the city and state of Minnesota. Owners Marvin Wolfenson and Harvey Ratner are selling Target Center and the team to help eliminate more than $72 million of the stadium's debt.
A troika of Minneapolis agencies will issue the $86 million of debt to finance the buyout, according to Robert Lind, acting finance director at the Minneapolis Community Development Agency.
Though the deal is still subject to change, Lind said it is expected that the Metropolitan Council will issue $51 million of revenue bonds and that the development agency will issue $16 million of revenue bonds to acquire the arena. The council is an economic development agency that serves both Minneapolis and St. Paul.
He said the city of Minneapolis will issue $19 million of general obligation bonds to refinance outstanding tax increment financing debt issued in 1989 to purchase land and prepare the site for Target Center. A portion of the increment bonds would have to be sold on a taxable basis because there is a private health club attached to the stadium.
Lind said city officials and underwriters met with insurance company officials in California and New York last week to take bids on insuring the bonds. He added that there has not been a final decision on insurance.
The Minneapolis city council and the Metropolitan Council must still give final approval to the deal, but both are expected to hold final votes early next month, according to Lind.
The National Basketball Association this summer gave the green light for a sale of the Timberwolves to Minnesota businessman Glen Taylor, who said he would buy the team with a group of silent partners for a reported $90 million.
"The owners won't technically sell the team until the building sells," said Rob Moor, who has been named president of the Timberwolves under Taylor. "Taylor has completed the transaction with regard to the purchase agreement, and we have an agreement with the manager of the building. We're all at this point just waiting for the building transaction to take place."
Wolfenson and Ratner had previously considered a $152.5 million offer for the team, but the NBA refused to approve the sale because the new owners would have moved the team to New Orleans.
Lind said that to his knowledge Piper Jaffray Inc. will remain as one of the seven underwriters on the deal, despite initial concerns they might be dismissed. The Metropolitan Sports Facilities Commission had inserted a provision in its approval of the financing team that allowed the commission to remove from the deal any firm with which it or the city of Minneapolis had an adversarial relationship.
The group's executive director, Bill Lester, has said the commission was concerned that it might become a Piper adversary because it lost $2 million in Piper's institutional government portfolio and was considering a lawsuit. Lester was unavailable to confirm that Piper will remain in the deal.
Dain Bosworth Inc. is the lead manager for the issue.