Forest City Enterprises bought more time on their ownership stake of the Brooklyn Nets, reaching a deal Wednesday with majority owner Mikhail Prokhorov to extend a payment owed to the Russian oligarch until Sept. 8.
The agreement delays a $31.3 million payment owed to Prokhorov’s Onexim Group for the second time this year. Last month, Forest City, which owns 20 percent of the basketball team through Nets Sports & Entertainment, succeeded in extending the payment deadline to Aug. 12 for an additional fee.
The payment is part of a 2013 forbearance agreement between the two sides, calling for Onexim to fund Forest City’s portion of the Nets’ capital calls through July 12 of this year, while forbearing Prokhorov’s right to dilute the real estate firm’s ownership interest in the basketball team in exchange for a fee.
With the previous extension, Forest City had until Aug. 12 to repay Onexim around $25 million, as well as $6.3 million for its share of a Nets capital call for the upcoming NBA season. Failure to do so would have seen Forest City’s ownership in the team diluted to 8 percent.
But with Forest City actively looking to divest its interest in the basketball team – as well as its 55 percent stake in the Barclays Center, the team’s Downtown Brooklyn home – the latest extension yet again delays the payment while keeping Forest City’s 20 percent interest in the Nets intact.
In the company’s second quarter earnings call last week, Forest City CEO David LaRue said the potential 12 percent dilution that the company’s Nets interest would incur “would be detrimental” to Forest City’s stake in the team and any value it could hope to gain from a sale.
“If it comes down to it, if we had to make that [forbearance] payment, we would,” LaRue added. The new extension now gives the firm until Sept. 8 to find a buyer for its 20 percent stake in the team.