CHICAGO - A closing date for the proposed $29 million sale of the St. Louis convention center hotel complex is scheduled for April 15, but the bond trustee cautions that it's not yet a done deal.
The sale would benefit holders of $98 million of senior lien revenue bonds that helped fund the projects. Bondholders took ownership of the complex more than four years ago after foreclosing on 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.
A majority of hotel bondholders struck a deal last fall to sell the larger of the two hotels that make up the complex - the Renaissance Grand -- for $26 million to investment group 800 Washington LLC. A separate deal to sell the smaller of the hotels, the Lennox Suites, to investment firm Maritz, Wolff & Co. for $3.2 million was later struck.
Both transactions hinge on the buyers striking new agreements on a variety of issues including tax credits, payments in lieu of taxes, and a new franchise pact with parties including the hotel operator, city, and state. Those agreements have been difficult to complete, delaying closing dates originally targeted for earlier this year.
"The closing of the sale of the hotels is currently scheduled for April 15, 2014,"
"As of the date of this notice, the buyers have not yet achieved agreement with all third-parties and there is no assurance that all necessary third-party agreements will be achieved by April 15 or at any time thereafter," the notice warns.
Absent an extension of the closing date, the purchase and sale agreements can be terminated. If either or both of the purchase and sale agreements is terminated, UMB said it "cannot at this time predict the future of the hotels or the prospects for sale."
If the closing occurs as scheduled, various fees must be paid before any distribution is made to bondholders including trustee fees, legal fees, broker fees, and fees owed to other professionals that assisted in the sales. Some funds may also be temporarily withheld to assure payment of future obligations. The trustee said it could not estimate how much bondholders would ultimately see.
The St. Louis Industrial Development Authority issued $98 million of senior lien revenue bonds in 2000 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 bonds traded earlier this month at 24.5 cents on the dollar, up from 21.7 cents in January and down from 28 cents in December.
