The New Jersey Devils could soon be in serious trouble that has nothing to do with the team's on-ice performance. According to numerous reports, the franchise is compiling a thick layer of debt that could ultimately lead to bankruptcy.
Forbes reports the Devils already have $250 million in debt surrounding the team and the arena, which the Devils control. According to Forbes that debt is growing because Devils owner Jeff Vanderbeek cannot afford to make interest payments and has capitalized the interest instead.
Afraid of the growing debt, Devils lenders are trying to sell shares of the team's debt at a discount, a source in the bond market told the Globe and Mail. The asking price for the shares is 75 cents on the dollar, and the bid price is 65 cents, meaning buyers and sellers are far apart.
According to the Globe and Mail's source, the shares at that price are in "loan-to-own territory," meaning buyers wouldn't have any reasonable hopes of being repaid, but would purchase the shares in hopes of becoming new owners of the team during a restructuring that would grant control of the team to creditors.
Vanderbeek did not comment on the Globe and Mail's story, but sources close to him told the newspaper no shares of the debt are being sold at a discount, and denied that anyone who purchases shares of the team's debt could gain control of the franchise.
Vanderbeek already missed a $100 million principal payment due Sept. 1, according to Forbes. The team cannot be forced into bankruptcy by creditors until after the Stanley Cup Finals.