Magazine article American Banker

Patriot American, a Dallas REIT, to Seek Eased Terms on $2.5B Credit

Magazine article American Banker

Patriot American, a Dallas REIT, to Seek Eased Terms on $2.5B Credit

Article excerpt

By DAVID WEIDNER

A bank group holding $2.5 billion of loans to Patriot American Hospitality Inc. will be asked to ease repayment terms, the company said Thursday.

The move came after debt-riddled Patriot American said it had hired Chase Securities Inc. and Morgan Stanley Dean Witter & Co. as advisers.

The company said it is seeking to avoid default on about $1.7 billion of term loans it must repay within 16 months. Among the cash-raising strategies being considered are a stock issue, bond debt, sale of assets, or a sale of the whole company.

Patriot American, a real estate investment trust based in Dallas, is carrying $3.8 billion of debt, including the syndicated loan Chase Manhattan Corp. led in July. About 50 banks hold pieces of the loan.

That loan package included an $800 million credit line, of which $787.8 million has been used. In a filing with the Securities and Exchange Commission, the company said its financing costs could substantially deflate fourth-quarter earnings. If that happened, Patriot American would violate the terms of its credit agreement.

A banker close to the deal said Patriot American is just one of several companies struggling to revise short-term loans that were supposed to be paid off through equity or bond issues.

"It's a question of current lenders working with them to get them to capital markets closure," the banker said. "We feel they'll get through this. This is not a dime-store operation. …

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