Fairfield Sentry Liquidators Suits Halt During Appeal
Bloomberg Businessweek–September showed the first sign of an increase in liquidity-squeezed companies as junk debt continued to be difficult to sell in early October.
The percentage of junk-rated companies with the lowest liquidity ratings inched up in September to 4.1 percent after being stable at 3.9 percent from June through August, Moody’s Investors Service said in an Oct. 18 report. Moody’s liquidity- stress index further increased to 4.2 percent by mid-October.
Over the first half of October, $3.3 billion in junk bonds were sold, an 82 percent decline from the same period in 2010, Moody’s said.
More companies would be facing default or liquidity hurdles absent successful refinancing over the last couple of years. Where $45 billion of junk debt outstanding in late 2009 was due to mature in 2012, refinancings reduced the maturing junk-debt total to $18 billion by August, Moody’s said.
Although increasing, the percentage of companies with the lowest liquidity is a fraction of the 20.9 percent peak reached in March 2009.
Moody’s liquidity-stress index measures the percentage of junk-rated companies with the weakest liquidity scores.
New Filings
Jameson Inns Owner in Chapter 11 to Stop Foreclosure
A mezzanine lender for the Jameson Inns Inc. hotel chain put a mezzanine borrower into Chapter 11 on Oct. 18 in Delaware to prevent foreclosure by another mezzanine lender.
Gramercy Loan Servicing LLC, as lender on a $40 million obligation, previously took over a mezzanine borrower to the hotel chain, which has 100 properties in 12 states. Gramercy was facing foreclosure on Oct. 19 of another $40 million mezzanine loan held by Colony Capital LLC from Santa Monica, California.
The hotels have a total of $335 million in financing, according to a court filing. At the top of the list is a $175 million mortgage loan with Wells Fargo Bank NA serving as special servicer. There are four tranches of mezzanine loans, each for $40 million.
All of the mezzanine loans matured in August, with Gramercy taking over its mezzanine borrower at the time. The Chapter 11 filing had the effect of preventing Colony from wiping out Gramercy’s interest.
The Jameson properties are operated under the names Jameson Inn and Signature Inn. The hotels are based in Smyrna, Georgia.
The mezzanine lender in Chapter 11 said its assets are worth more than $100 million while debt is less than $50 million.
The case is In re JER/Jameson Mezz Borrower II LLC, 11- 13338, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Poultry Producer Cagle’s Files Chapter 11 in Atlanta
Cagle’s Inc., an integrated poultry producer from Atlanta, filed for Chapter 11 protection yesterday in its hometown.
The company produces 1.7 million birds a week from two company-owned facilities. Contract growers are utilized for raising the poultry.
Losses were running as much as $3 million a month as the result of the high price of feed and the low price for poultry, a court filing said.
Liabilities include $33.5 million owing on a revolving credit with AgSouth Farm Credit ACA. The lender is providing $6.5 million in credit for the Chapter 11 case.
Metropolitan Life Insurance Co. is owed $7.7 million on mortgages on specified facilities.
The assets are worth more than $50 million while debt is less than $50 million, the petition says.