By Joseph Checkler
A group of well-known luxury resorts owned by hedge-fund manager
Paulson & Co. filed a new reorganization plan that would pay
several key creditors in full but would leave junior creditors with
much lower recovery.
In a Tuesday filing with U.S. Bankruptcy Court in Manhattan, the
resort owner, MSR Resort Golf Course LLC, said it plans to pay 100%
of the claims of Hilton Worldwide and Marriott International Inc.
(MAR), which have managed several of the resorts. Some of the
resorts' so-called "mezzanine" lenders will get 100% of their money
back, while another tier of those lenders will get between 8% and
68%. Five Mile Capital Partners, which is owed $50 million as the
company's junior-most mezzanine lender, is set to get nothing for
that claim.
The filing of MSR's plain-language plan to exit bankruptcy,
called a disclosure statement, must eventually be approved by a
judge and voted on by MSR's creditors.
MSR plans on generating money through an auction of its four
remaining properties, which will happen on Nov. 8. Singapore's
real-estate investment arm has been named the lead bidder, with an
offer of $1.5 billion. The document contains several clauses that
give Five Mile the right to object to aspects of the auction,
including a $14 million breakup fee that could go to the Singapore
entity, GIC Re, if it's outbid. As one of the lenders on MSR's
bankruptcy loan, Five Mile is a key creditor in the case.
GIC's offer includes $360 million in debt forgiveness and $1.1
billion in cash. The entity holds mezzanine debt in the resorts and
mortgage-backed securities tied to one of the group's mortgage
loans.
Paulson and Winthrop Realty Trust put MSR--which encompassed
five resorts at the time--into bankruptcy protection in February
2011. Since then, the company has sold its Doral Golf Resort &
Spa in Miami to Donald Trump for $150 million, forged a new
management deal for its Grand Wailea resort hotel and spa in Maui,
and is trying to negotiate a new management pact for its La Quinta
Resort & Club in Palm Springs, Calif.
The resorts up for sale at the auction are the Grand Wailea, La
Quinta, Arizona Biltmore in Phoenix, and the Claremont in Berkeley,
Calif.
GIC was involved very early in the case as well, offering $1.48
billion for what was then a group of five properties right after
the bankruptcy filing.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Joseph Checkler at joseph.checkler@dowjones.com
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