Lehman Commercial Paper seeks to restructure Italian fund interests

By Caroline Salls

Pittsburgh, Sept. 27 - Lehman Commercial Paper Inc. requested court approval to restructure its interests in an Italian real estate fund, according to a Sept. 27 filing with the U.S. Bankruptcy Court for the Southern District of New York.

Lehman Commercial Paper said it entered into a €328 million mezzanine loan facility with Dutch borrower Zwinger OpCo 6 BV on Aug. 15, 2007.

Under that facility, Lehman Commercial Paper provided financing for the acquisition of about 95% of the units in an Italian real estate fund, and the Lehman debtor still held a €278 million mezzanine debt position in the Calvino credit facility when it filed for bankruptcy.

However, the company said it has not been receiving amounts due to it under the credit facility because of a non-functioning security agent and the delayed pace of asset sales that have resulted from the slowdown in the Italian real estate market.

Under the restructuring, Lehman Commercial Paper will convert €33.5 million of the tranche B debt into equity in Zwinger, which will allow it to share in any upside value in Zwinger's interest in a Berenice Fund.

In addition, the margins on Lehman Commercial Paper's remaining portion of the tranche B debt will be substantially increased, the maturity date of the Calvino credit facility will be extended by about three years, and Zwinger will pay more than €2 million in extension fees.

Also under the agreement, Lehman Brothers International Europe will be replaced as agent, which will result in the release of blocked funds and an immediate payment of €116 million to Lehman Commercial Paper.

A hearing is scheduled for Oct. 19.

New York-based Lehman Brothers Holdings was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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