PALM BEACH, FLORIDA Innkeepers USA Trust has struck a deal to cut its debt by US$400 million, clearing the way for the lodging REIT to emerge from Chapter 11 bankruptcy protection.
The deal with Innkeepers’ major creditors includes an agreement with asset management firm Five Mile Capital Partners LLC and a unit of Lehman Brothers Holdings Inc. to provide US$174.1 million in equity capital to the REIT, Reuters reports. Five Mile and Lehman will also convert US$200.3 million of their debt into 100% equity in the reorganized Innkeepers.
The deal values Innkeepers at about US$1.14 billion.
The deal—which still requires approval from a New York bankruptcy court—is backed by Midland Loan Services Inc., a special servicer to a US$825 million fixed rate mortgage loan that will be reduced to US$622.5 million under the proposed plan.