LodgeNet plan effective March 28; Colony-led syndicate takes ownership

By Caroline Salls

Pittsburgh, March 28 - LodgeNet Interactive Corp. said its emergence from Chapter 11 bankruptcy was completed when a syndicate of investors led by Colony Capital LLC acquired the company in exchange for 100% of the new common stock in the company.

According to a LodgeNet news release, the syndicate's investment was made concurrently with the company's $70 million recapitalization and a new $358 million long-term credit facility.

As previously reported, LodgeNet's pre-packaged plan of reorganization was confirmed on March 7 by the U.S. Bankruptcy Court for the Southern District of New York.

Plan terms

Under the pre-packaged plan, the holders of LodgeNet's secured debt will receive an amended and restated credit agreement providing a new five-year term loan for the existing $346.4 million secured credit facility, plus the amount of unpaid interest accrued before bankruptcy and post-bankruptcy through the earlier of the closing date and 90 days after the bankruptcy filing date. The interest will be paid at the non-default rate.

Interest on the new credit agreement will be 6¾%. Principal payments are expected to be 1% each year, payable in equal quarterly installments.

LodgeNet's unsecured creditors will be paid in full in cash for any pre-bankruptcy claims.

Holders of the company's existing series B preferred stock and common stock will have their interests cancelled and will not receive any distributions.

On the plan effective date, reorganized LodgeNet Interactive will issue warrants to acquire new common stock to entities and in amounts determined by Col-L Acquisition, LLC for a purchase price of $5,000.

In addition, the purchasers or their representative's designees also may purchase any number of additional shares of new common stock at a price determined in the investment agreement, up to a total additional purchase price of $30 million.

Exit financing

In addition the company will enter into an up to $20 million 4.5-year revolving credit exit facility, including a $5 million sublimit for letters of credit.

LodgeNet said revolver advances will be limited to the lesser of the sum of up to 85% of eligible accounts receivable, plus an amount equal to the lesser of $5 million and 75% of the appraised fair market value of the company's eligible owned real estate; or $20 million, minus reserves the lender may establish in good faith.

Interest on the revolver will be either Base rate plus 125 basis points or one-month, two-month or three-month Libor plus 225 bps, at the company's option.

New management

The company said Colony principal and Miramax chairman Richard Nanula will serve as LodgeNet's chairman.

In addition, Michael Ribero has been appointed as president and chief executive officer. He previously served as chief marketing officer at Hilton and Eastern Airlines and held executive positions at other technology-based advertising and marketing firms.

Ribero is on the board of the Tropicana Las Vegas Hotel and Casino.

"We are confident that the combination of LodgeNet's new management team, the company's improved financial flexibility and the previously announced strategic partnership with DirecTV will significantly benefit customers, partners, employees and all stakeholders in the months and years ahead," Nanula said in the release.

Ribero said in the release, "We are refocusing LodgeNet to provide a new range of opportunities for our customers.

"LodgeNet is committed to partnering with the hotel and health care industries to deliver innovative, user-friendly, value-added media and entertainment solutions.

"Together with Colony, which brings financial and operational flexibility and the new strategic partnership with DirecTV, we will offer our customers new entertainment and connectivity options, as well as equipment financing that provides a solid foundation for growth."

LodgeNet is a Sioux Falls, S.D.-based provider of interactive media and connectivity services to hospitality and health care businesses. The Chapter 11 case number is 13-10238.

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