I didn't know if you saw this
To: AsburyPark@yahoogroups.com
From: dfsav...@yahoo.com
Date: Thu, 11 Nov 2010 17:14:01 +0000
Subject: [AsburyPark] Istar
IStar seeking credit line to avert bankruptcy
Real estate lender is in talks with Franklin Resources, Centerbridge Capital
Partners and other lenders about lining up as much as $2 billion in new
financing.
By Bloomberg News
Published: November 11, 2010 - 11:35 am
(Bloomberg) -- IStar Financial Inc., the commercial real estate lender seeking
to avert a bankruptcy filing next year, is in talks with creditors about
exchanging debt and lining up as much as $2 billion in new financing, three
people with direct knowledge of the matter said.
Franklin Resources Inc., IStarâs largest bondholder, is leading one of the
groups offering financing, said the people, who asked not to be identified
because the discussions are private. The company is also in talks with
Centerbridge Capital Partners as well as other lenders, including its banks,
about potential financing, according to the people.
IStar, which has funded properties including the Trump SoHo hotel-condominium
building in lower Manhattan, may refinance its loans with a new $1 billion to
$2 billion credit line as an alternative to seeking bankruptcy protection, the
people said. IStar, which is being advised by Lazard, had about $2.8 billion of
non-performing loans as of Sept. 30 and reported that its third-quarter net
loss narrowed to $75.5 million from $248 million a year earlier.
âThe fundamentals of iStarâs business appear to have improved, potentially
making third-party or lender financing a more viable solution,â said Michael
Kim, an analyst at CRT Capital Group in Stamford, Connecticut. âClearly there
is more work to be done given the level of troubled assets in the portfolio,
but the strength in the credit markets may allow the company to find a workable
refinancing.â
Andrew Backman, a spokesman for New York-based iStar, declined to comment.
Investors have embraced high-yield, high-risk debt as the Federal Reserve has
held interest rates at record lows to stimulate the economy. The extra yield
investors demand to own the bonds rather than Treasuries has shrunk to 5.75
percentage points from 21.82 percentage points in December 2008, Bank of
America Merrill Lynch index data show.
Financing talks with bondholders, banks and other potential investors are
preliminary, said the people, and specifics about the size of the package or
interest rates havenât been determined. Any final deal is likely at least
months away, according to the people.
Loomis Sayles & Co., another iStar bondholder, and H/2 Capital Partners, the
investment firm run by former iStar Executive Spencer Haber, are working with
Franklin on the potential debt exchange and financing, according to the people.
They are being advised by Milbank, Tweed, Hadley & McCloy, the people said.
IStar is looking to exchange existing debt for new securities with a longer
maturity, the people said.
Representatives from Loomis Sayles, H/2, Franklin, Centerbridge and Milbank
werenât immediately available to comment.
A new facility could allow the company to refinance some of its secured debt,
the people said. IStar has about $1.7 billion of loans due in June 2011,
according to one of the people.
Hedge funds that hold some of iStarâs loans include Silver Point Capital,
Davidson Kempner Capital Management and Monarch Alternative Capital, people
familiar with the matter said in September. The funds are represented by Akin,
Gump, Strauss, Hauer & Feld, according to the people.
After creditors blocked it from amending loans, iStar considered a so-called
pre-packaged bankruptcy, where key terms are in place before filing, people
familiar with the situation said in September. The company needed to negotiate
a âmaterial reduction in terms to avert bankruptcy,â Fitch Ratings said on
Sept. 29.
IStar shares rose 19% on Oct. 28, the most in a more than a year, after the
company announced it would pay down a $1 billion credit facility.
IStarâs $448.5 million of 5.95% bonds due in October 2013 have risen to 91.5
cents on the dollar through yesterday from 75 cents on Sept. 21, according to
Trace, the bond price reporting system of the Financial Industry Regulatory
Authority.
[Non-text portions of this message have been removed]
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