Bear Stearns Sells First-Ever Asset-Backed Financing for a Sports Facility.NEW YORK--(BUSINESS WIRE)--July 30, 1998-- Could Change the Way Sports Stadiums are Financed Bear Stearns announced today that it has sold $139.8 million in asset-backed securities for Ascent Entertainment Group, Inc., owner of Denver's professional hockey and basketball teams, in order to finance the $169 million Pepsi Center arena now under construction. This offering marks the first time asset-backed securities have been used to finance a sports facility, and the first unenhanced single-A rated, private sports facility financing. The taxable notes, sold under Rule 144-A for the Denver Arena Trust, bear an interest rate of 6.94%, are non-recourse debt Non-Recourse Debt A loan that is secured by some sort of collateral, usually property. The issuer can seize the collateral if the borrower defaults. Notes: These types of projects are characterized by high capital expenditures, long loan periods, and uncertain revenue and have a final maturity of 21 years with an average life of ten years. The future revenue streams that Ascent is securitizing come from contractually obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. fees from arena-naming rights, two of the facility's corporate sponsorships and luxury suite licenses. Since the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. dedicates only a portion of the arena's revenue streams it creates significant financing flexibility, leaving other income sources at the company's disposal. "This new financing technique has four key advantages that can help in completing new or renovated sports facilities," said John Gillespie, a Bear Stearns managing director who heads the firm's sports financing group. "It provides lower interest rates, higher credit ratings, more advantageous debt coverage levels and far greater flexibility in the use of other revenues. Until now, stadium construction has almost always been funded through more expensive project-finance loans or high yield bonds. Teams that are building new facilities, refinancing debt or just in need of extra capital could use asset-backed securities to their advantage." In an asset-backed securitization, the sports facility owner sells the rights to specific revenues to a bankruptcy-remote trust. The trust then sells to investors notes secured by the future revenues and the right to renewals of the underlying contracts during the life of the debt. Because it focuses only on third-party, contractually-obligated income and isolates it from many of the risks inherent in other financing structures, the terms can be more favorable for the issuer and the investors. "It's a win-win situation for both stadium owners and buyers of stadium debt," said Lesley Goldwasser
Danziger Goldwasser (German: Gold water of Danzig , senior managing director with Bear Stearns' asset backed securities group. "The issuers save money and gain flexibility in financing, while the investors obtain the rights to the most creditworthy cred·it·wor·thy adj. Having an acceptable credit rating. cred  it·wor revenues."
Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals , Inc. provided an "A" rating on the securities and Cadwalader, Wickersham & Taft served as the transaction counsel. The securities being offered in the private placement have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy such securities. Bear, Stearns & Co. Inc., a leading worldwide investment banking and securities trading and brokerage firm, is the major subsidiary of The Bear Stearns Companies Inc. (NYSE NYSE See: New York Stock Exchange : BSC (Binary Synchronous Communications) See bisync. ). With approximately $16.3 billion in total capital, Bear Stearns serves governments, corporations, institutions, and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, private client services, derivatives, asset management, correspondent clearing, securities lending Securities Lending When a brokerage lends securities owned by its clients to short sellers. Notes: This allows brokers to create additional revenue (commissions) on the short sale transaction. , and custody services. Headquartered in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. , the company has over 9,000 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles and San Francisco; and an international presence in Beijing, Buenos Aires, Dublin, Geneva Geneva, canton and city, Switzerland Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. , Hong Kong, London, Lugano, Paris, Sao Paulo, Shanghai, Singapore and Tokyo.
CONTACT: Mary Flounders Green
Corporate Communications
Bear, Stearns & Co. Inc.
212/272-4356
or
Jim Cronin
CFO and COO
Ascent Entertainment Group, Inc.
303/626-7010
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