Centerline further details restructuring, credit facility changes

By Angela McDaniels

Tacoma, Wash., March 10 - Centerline Holding Co. provided more details about its recent restructuring in an 8-K filing with the Securities and Exchange Commission on Wednesday.

The restructuring was completed on Friday and eliminated approximately $1.6 billion of liabilities and contingent exposure, provided more than $100 million of new equity and restructured substantially all of Centerline Holding's and Centerline Capital Group's outstanding debt.

Equity changes

Holders of a majority of the company's preferred shares agreed to exchange their holdings for special series A shares.

Each special series A share is equivalent to 15 common shares. They will automatically convert into common shares once the company receives shareholder approval to increase the number of shares authorized for issuance, according to the 8-K filing.

Island Capital Group LLC affiliate C-III Capital Partners LLC now holds 38% of the outstanding common equivalents, making it the company's largest shareholder.

Previous holders of Community Reinvestment Act preferreds now own approximately 36% of the common share equivalents outstanding.

Specifically, holders of approximately 97% of the company's 4.4% cumulative perpetual convertible Community Reinvestment Act preferreds, series A-1, 100% of its convertible Community Reinvestment Act preferreds and approximately 87% of its series A convertible Community Reinvestment Act preferred shares agreed to exchange their preferreds for special series A shares.

Previous common shareholders retained about 20% of the outstanding common share equivalents.

Natixis Financial Products Inc. follows with ownership of approximately 4.9% of the common share equivalents.

Finally, previous holders of the company's 11% cumulative convertible preferreds, series A-1, own approximately 0.7% of the common share equivalents.

In total, Centerline said $341.2 million liquidation and redemption value of preferreds were exchanged for the common share equivalents.

Credit facility changes

C-III Capital Partners agreed to assume $60 million of the company's borrowings under its credit facility, and TRCLP Affordable Acquisitions LLC agreed to assume $5 million.

The debt assumption made up a portion of the $110 million C-III Capital Partners paid to acquire interests in some of the company's subsidiaries that operate its real estate debt fund management and commercial mortgage loan servicing businesses and some other financial assets. The remaining $50 million was paid in cash.

The company said it used a portion of the sale proceeds to pay off $116.3 million face amount of unsecured liabilities and claims at a discount.

TRCLP is an affiliate of the Related Companies, a former affiliate of Centerline controlled by former board of trustees chairman Stephen M. Ross.

According to the 8-K, Centerline also amended and restated its credit facility.

The company has $137.5 million of outstanding term loan borrowings under the amended credit agreement and a revolving credit limit of $36.98 million. The revolving credit limit includes $11.98 million of existing letters of credit that, if terminated, cannot be used for general corporate capital needs.

The revolver matures March 4, 2015, and the term loan matures March 3, 2017.

The interest rate for credit facility is Libor plus 300 basis points.

Bank of America, NA is the administrative agent.

Swap debt eliminated

Finally, Centerline said it entered into transactions with affiliates of Merrill Lynch and Natixis Financial Products that eliminated the company's contingent liabilities in connection with more than $800 million of credit-default swaps associated with some guaranteed Low-Income Housing Tax Credit funds.

The company retained and will continue to operate its core businesses, including Low-Income Housing Tax Credit origination, asset management and affordable and conventional multifamily lending, mainly as an agency or government-sponsored enterprise lender.

Centerline also entered into an advisory agreement with an affiliate of Island Capital wholly owned subsidiary Anubis Advisors under which Anubis will provide strategic, restructuring and general advisory services to Centerline.

Centerline is a New York-based real estate finance and investing company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.