Friday, October 11, 2019

Oshkosh arena developer asks to hire financing broker to turn promised TIF payments from city into cash

The bankruptcy judge overseeing the case must still give his approval for proposed hiring.
By Miles Maguire
The owner of the Menominee Nation Arena is seeking permission to hire a high-risk financial specialist to turn a string of promised payments from the city into a lump sum of cash that can be used to start satisfying creditors and to fund operations.

In an Oct. 9 filing, Fox Valley Pro Basketball Inc. identified Chicago-based Hillenbrand Partners as the firm it wants to use to “securitize” roughly $5 million in tax increment financing that the city has promised to pay in annual installments each November over the next 17 years.

The promised money carries a floating interest rate, initially set at 5 percent. Hillenbrand’s job would be to find an investor that would pay cash up front to the arena owners in exchange for the rights to the future ongoing payments.

“The financing could be through a loan, assignment of rights or a sale,” lawyers for Fox Valley said in a court filing.

Hillenbrand is headed by Eric Hillenbrand, who is described in court papers as having “a personal friendship” with one of the top officials of Fox Valley, Walter Koskinen, and also a “relationship with the Menominee Nation in matters that are unrelated” to the arena’s bankruptcy case.

The Wall Street Journal has described Hillenbrand as a pioneer in developing the market for high-risk loans tied to commercial real estate.

“Mr. Hillenbrand is the founder and chief executive of Hillenbrand Partners, a Chicago firm with $200 million in capital that specializes in buying the riskiest portions of bonds backed by mortgages on offices, retail stores and other commercial properties,” the Journal said in 2008.

The market for such loans dried up following the 2008 financial crisis but has been growing again over the last five years or so.

Hillenbrand’s stature is such that the Journal wrote an article in 2013 taking note of his return to dealing in high-risk commercial real estate loans. “Mr. Hillenbrand’s comeback is the latest sign of recovery for the real-estate and structured-finance markets,” the paper said.

Before starting his own firm, Hillenbrand worked for Morgan Stanley, J.P. Morgan, Bank One and First Chicago, according to his social media resume.

The proposal to hire Hillenbrand would need the approval of the judge overseeing the arena bankruptcy case. According to court papers, the firm would receive a retainer of $5,000 and could be paid up to $75,000. Hillenbrand himself could charge $300 an hour for his work on the case if the engagement agreement is approved.

Hillenbrand’s firm had previously worked on efforts to obtain financing for the arena, according to Fox Valley’s court filing. Those efforts were stymied by environmental issues at the arena site, which have since been resolved.

Hillenbrand did not respond to a request for comment.

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