Innkeepers Unsecured Creditors Object To Buyout
28 Fevereiro 2011 - 5:56PM
Dow Jones News
A group of Innkeepers USA Trust creditors joined others in
protesting Five Mile Capital Partners and Lehman Brothers Holdings
Inc.'s (LEHMQ) $374.4 million bid to buy the hotel owner, because
the structure of the deal limits recoveries to those creditors at
$2.5 million.
In a Friday filing with the U.S. Bankruptcy Court in Manhattan,
Innkeepers' official committee of unsecured creditors calls the
term sheet outlining the sale "unconfirmable," and says it wants a
say in the review of bids.
"The bidding procedures fail in certain respects to foster and
promote competitive bidding, and propose impediments to third-party
participation," the committee says in the filing.
The committee points out that while the plan calls for unsecured
creditors to get $2.5 million, "it is unclear from the Term Sheet
whether this sum is meant to be equivalent to or greater than the
amount that is rightfully due and owing to unsecured creditors
under the terms of the bankruptcy code."
One key problem the committee has is that if a competing bidder
offers more for Innkeepers, unsecured creditors would not see any
of the proceeds from that overbid.
Several other Innkeepers creditors are objecting to the Lehman
and Five Mile Plan, which calls for the two companies--previously
adversaries in the case--to pay $374.4 million in cash and debt in
exchange for a controlling stake in Innkeepers. As a key element of
that deal, Midland Loan Services, which represents Innkeepers
mortgage lenders owed more than $825 million, has agreed to take a
$200 million reduction on that debt.
A hearing on the deal is set for next week.
Appaloosa Management LP and LNR Securities Holdings LLC have
come out against the plan, upset that their indirect investment in
Innkeepers' mortgage debt will suffer a loss under the plan.
Innkeepers filed for Chapter 11 protection in July 2010 to
restructure more than $1 billion in debt, much of which stemmed
from Apollo Investment Corp.'s (AINV) 2007 buyout.
The Lehman/Five Mile plan is the second that the Palm Beach,
Fla., company has offered since its bankruptcy filing. The company
had to scrap its first plan, which allowed existing owner Apollo to
retain an ownership stake, after the deal was widely panned by
creditors and ultimately rejected by Judge Shelley C. Chapman of
U.S. Bankruptcy Court in Manhattan.
Innkeepers is a real estate investment trust with interests in
72 hotels, many of them operating under Marriott International Inc.
(MAR) brand names.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152;
joseph.checkler@dowjones.com
--Eric Morath contributed to this article.
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