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Ritz-Carlton San Juan Has A New Owner
The RECP San Juan receives U.S. Bankruptcy Court approval to take over ownership from Green Isle; will enter into a new long-term operating agreement with Ritz-Carlton
By EVELYN GUADALUPE-FAJARDO
May 8, 2003
The U.S. Bankruptcy Court in Florida authorized RECP San Juan Investors LLC, the holder of the first mortgage on The Ritz-Carlton San Juan Hotel, Spa & Casino in Isla Verde, to take over ownership of the property.
Judge Raymond Ray endorsed last week a Chapter 11 reorganization plan by RECP, a subsidiary of Donaldson, Lufkin & Jennette (DLJ) Real Estate Capital Partners and a wholly owned indirect subsidiary of Credit Suisse First Boston, to become the resorts owner.
In return, the DLJ will pay off the unsecured creditors and reposition the hotel so it has a positive cash flow. The RECP, whose claims exceeded $105 million, intends to reduce its secured claims and lien to $87 million, the appraised value of the Ritz-Carlton San Juan as determined by PricewaterhouseCoopers LLP.
"Were ecstatic! After a long period of uncertainty, it is finally over and we can move forward to ensure that we retain our place as the best hotel in Puerto Rico," said Mark Stevenson, general manager of the Ritz-Carlton San Juan.
Stevenson said he expects it will take several weeks to transfer the ownership title on the property, the liquor and casino licenses, and the fire permit. RECP will pay Green Isle, the former owner of the Ritz-Carlton San Juan, $3 million for the title to all of its assets related to the resort, including collateral and specified unencumbered assets of nominal value, consisting of intangible contract and other rights such as warranties that have no value independent of the projects ownership.
As part of the reorganization plan, the RECP will enter into a new long-term operating agreement with Ritz-Carlton, an indirect subsidiary of Marriott International. The new agreement requires the RECP to replenish operating accounts and recapitalize the resort.
"Green Isle scaled back on the projects design; now we will have new funding for renovations and to change the design of the hotel," Stevenson said. Some of the renovations planned for the Ritz-Carlton San Juan include redoing its 416 rooms, building a second ballroom, and refurbishing the restaurants.
Ritz-Carlton has agreed to subordinate its unsecured claims, which include approximately $3 million consisting primarily of unreimbursed operating expenses plus $25 million of rejection-damage claims. The plan also provides for Ritz-Carlton to be released from the litigation initiated by Green Isle, which would be deemed settled under the plan.
After buying the Afica bond debt for The Ritz-Carlton San Juan Hotel, Spa & Casino from the Government Development Bank, the RECP acquired in September 2002 the Puerto Rico Tourism Development Funds (TDF) claims against Green Isle regarding a reimbursement agreement, dated December 1995, between the two.
This Caribbean Business article appears courtesy of Casiano Communications.