Innkeepers USA disclosure statement approved; plan hearing June 23

By Caroline Salls

Pittsburgh, May 19 - Innkeepers USA Trust received court approval of the disclosure statement for its amended plan of reorganization, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The plan confirmation hearing is scheduled for June 23.

The company filed an amended plan on May 9 to incorporate the terms of a $1.12 billion winning bid for its fixed-rate/floating-rate debtors' assets.

As previously reported, Innkeepers was granted court approval on March 11 to enter into an amended plan funding commitment letter with Five Mile Capital II Pooling REIT LLC and Lehman ALI Inc., as well as Midland Loan Services.

The company said the Five Mile/Lehman bid was valued at $970.7 million.

However, according to the amended disclosure statement, Cerberus Capital Management, LP/Chatham Lodging Trust submitted the only qualified competing bid. Following the auction, Cerberus/Chatham was named the winning bidder for the fixed-rate/floating-rate debtors' assets.

The original Cerberus/Chatham baseline bid was valued at $978.7 million, including $622.5 million of debt financing and a $356.2 million equity investment from the winning bidders.

The winning bid after the May 2 auction was Cerberus/Chatham's $1.12 billion offer, yielding about $154 million more in value than the Five Mile/Lehman bid.

Innkeepers said that Chatham LP also submitted the $195 million winning bid for the company's LNR Partners LLC properties.

Plan terms

Under the amended plan:

• The debtor-in-possession facility provided by a Lehman ALI affiliate and tranche A of a post-bankruptcy credit facility provided by Five Mile will be repaid in full in cash;

• Midland, the company's largest creditor, will receive a new note reducing the principal amount under a fixed-rate mortgage loan pool, with no change to the interest rate, no amortization for the first 48 months under the plan effective date and no pre-payment penalty, as well as cash in an undisclosed amount;

• Lehman, Innkeepers' second-largest creditor, will receive a cash payment in an undisclosed amount in exchange for 100% of its claim against the fixed/floating debtors on account of a floating-rate pool mortgage loan;

• Holders of floating-rate pool mezzanine loan claims will receive a cash payment in an undisclosed amount;

• Holders of general unsecured claims against the fixed/floating debtors will receive a share of $4.65 million, with holders of general unsecured claims against the Grand Prix West Palm Beach debtor only receiving a share of $100,000;

• Holders of intercompany claims and interests will not receive any distributions; and

• Holders of existing common and preferred equity interests in the fixed/ floating debtors will receive no distribution.

Innkeepers USA, a Palm Beach, Fla., hotel real estate investment trust, filed for bankruptcy on July 19, 2010. The Chapter 11 case number is 10-13800.

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