DiamondRock Reaches Settlement on Allerton Bankruptcy
BETHESDA, Md., Oct. 31, 2012
BETHESDA, Md., Oct. 31, 2012 /PRNewswire/ --DiamondRock Hospitality Company
(the "Company") (NYSE: DRH) today announced that it reached a settlement of
the bankruptcy and related litigation involving the Allerton Hotel.
(Logo: http://photos.prnewswire.com/prnh/20040708/DCTH028 )
"This settlement allows DiamondRock to receive a meaningful return on its
original distressed debt investment in the Allerton Hotel with a combination
of a cash payment and restructured mortgage loan totaling $71 million. We
look forward to generating a strong cash yield from our investment in the
Allerton Hotel mortgage debt. In addition, we are optimistic that the current
owners will successfully restore the hotel to its historic place among the
hotels on Magnificent Mile," stated Mark W. Brugger, Chief Executive Officer
of DiamondRock Hospitality Company.
In exchange for resolving its objection to the plan of reorganization filed by
affiliates of Petra Capital Management, DiamondRock will receive a $5 million
principal payment and will restructure the debt it currently holds into a $66
million senior mortgage loan with a four-year term (plus a one year extension
option), bearing interest at 5.5%. The settlement, which has been approved
by the United States Bankruptcy Court in the Northern District of Illinois, is
subject to certain closing conditions. If these conditions are not met by
January 18, 2013, including the payment of $5 million, then the Allerton Hotel
will be sold pursuant to an auction in accordance with the Bankruptcy Code, in
which case the Company would have a $71 million claim in the sale process. In
2010 the Company paid approximately $60 million for this distressed debt.
The interest income and legal fees related to the Company's interest in the
Allerton hotel have been excluded, and will continue to be excluded, from its
reported Adjusted EBITDA and Adjusted FFO during 2012. As of September 7,
2012, the Company's net book value of the mortgage note receivable was
approximately $54.2 million. The Company intends to include the interest
income from the note in the Company's reported Adjusted EBITDA and Adjusted
FFO starting on January 1, 2013.
About the Company
DiamondRock Hospitality Company is a self-advised real estate investment trust
(REIT) that is an owner of premium hotel properties. The Company owns 26
premium hotels with approximately 11,500 rooms and holds one senior mortgage
loan. The Company's hotels are generally operated under globally recognized
brands such as Hilton, Marriott, and Westin. For further information, please
visit DiamondRock Hospitality Company's website at www.drhc.com.
This press release contains forward-looking statements within the meaning of
federal securities laws and regulations. These forward-looking statements are
generally identifiable by use of the words "will," "believe," "expect,"
"intend," "anticipate," "estimate," "project" or similar expressions, whether
in the negative or affirmative. Forward-looking statements are based on
management's current expectations and assumptions and are not guarantees of
future performance. Factors that may cause actual results to differ
materially from current expectations include risks that the conditions to the
settlement agreement may not be satisfied timely, or at all, and those risk
factors and other factors discussed from time to time in our periodic filings
with the Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2011. Accordingly, there is no
assurance that our expectations will be realized. Except as otherwise required
by the federal securities laws, we expressly disclaim any obligations or
undertaking to publicly release any updates or revisions to any
forward-looking statement contained in this press release to reflect events,
circumstances or changes in expectations after the date of this press release.
SOURCE DiamondRock Hospitality Company
Contact: Sean Mahoney, +1-240-744-1150
Press spacebar to pause and continue. Press esc to stop.