CHICAGO - Holders of $98 million in bonds issued for the St. Louis convention center hotel complex are set to recoup about $33 million on their investment following the sale of the facilities.
The trustee intends to distribute $32 million on June 20. Another $980,000 will be distributed on or before Aug. 30 if no post-closing claims are filed, bond trustee UMB Bank
The net proceeds after fees, costs and expenses, plus trust funds held by the trustee, less certain mandatory and discretionary holdbacks for post-closing potential claims and expenses, totaled approximately $32 million, the notice read. The proceeds will be distributed on a pro rata basis.
"Other than the post-closing funds held by the trustee, the trustee is not in possession of any other assets that may be distributed to the bondholders," the notice read. "It is not possible at this time to predict whether any post-closing claims will be made. "
The St. Louis Board of Aldermen recently signed off on an amended redevelopment agreement related to the convention center hotel complex, helping to clear the path for the default-ridden complex's sale.
The agreement included several concessions. It reduced annual payments required by the purchaser of the larger of the two hotels - the Renaissance Grand -- on a city loan. The purchaser has agreed to invest $22 million in the hotel under an agreement with hotel operator Marriott.
A majority of hotel bondholders struck a deal last fall to sell the Renaissance Grand for $26 million to investment group 800 Washington LLC. They later struck a separate deal to sell the smaller of the hotels, the Lennox Suites, to investment firm Maritz, Wolff & Co. for $3.2 million.
The closing dates have been pushed back this year as the buyers, city, and the trustee finalized complex agreements needed to allow for the sale.
The distribution will bring to an end a saga that began in 2000 when the St. Louis Industrial Development Authority issued $98 million of senior lien revenue bonds as part of a complicated $266 million financing that included public funding to acquire and renovate the hotels.
The hotels have struggled since opening in 2003 and the recession's negative impact on tourism, along with competition from other new hotels, further hampered their performance.
The smaller suites hotel closed in 2011. The new owners plan to renovate the facility and reopen in 2015.
Bondholders took ownership of the complex in 2009 following the obligated group's default in 2008. Bondholders had for several years tried to unload the hotels but a sale was put off as they waited for the real estate market to recover in hopes of capturing a better price.
The bonds were trading this week at 33 cents on the dollar, an amount fairly on par with the anticipated payout. The trustee's legal representation was provided by the law firms Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, and Spencer, Fane, Britt and Browne, LLP.
