Lakeview solicits consents to extend debentures, reduce interest rates

By Angela McDaniels

Tacoma, Wash., Oct. 28 – Lakeview Hotel Investment Corp. does not have enough cash to make interest payments on or repay its C$18,326,000 outstanding series C redeemable subordinated debentures or its C$10.16 million outstanding series D redeemable subordinated debentures, according to a company news release.

The company said its ability to realize its current business strategy and to establish adequate working capital is contingent on, among other things, a successful resolution of the upcoming maturities of the debentures and deferring interest payments until Aug. 22, 2019.

As a result, the company is soliciting consents to

• Extend the maturity date of the series C debentures to Aug. 22, 2019 from June 30, 2017;

• Extend the maturity date of the series D debentures to Aug. 22, 2019 from May 31, 2018;

• Change the interest rate of the series C debentures to 7% from 8%;

• Change the interest rate of the series C debentures to 7% from 9%;

• Pay interest at maturity rather than semiannually; and

• Add two restrictive covenants to section 6.04 of the trust indentures.

The first covenant would restrict the payment of deferred fees by Lakeview to Lakeview Management Inc. that would reduce the deferred fee balance owing to Lakeview Management Inc. to under C$3.1 million until such time as all accrued interest on the series C debentures has been paid. Lakeview said any of the C$3.1 million deferred fees outstanding as of the maturity date would be subordinate to repayment of principal and interest on the debentures.

The second covenant would provide that Lakeview may not increase the principal amount of senior debt (other than in connection with Lakeview's hotel in Prince George, B.C.) beyond the amount outstanding as at the date of the third supplemental indenture unless either debentureholder approval has been obtained or the amount in excess of such principal amount is used to pay down the accrued interest and principal on the debentures and Lakeview's series D redeemable subordinated debentures on a pro rata basis.

Debentureholders will vote on the changes at meetings to be held on Nov. 28.

If the company receives the written consent of the holders of at least two-thirds of the principal amount of a series of debentures prior to the meeting, the amendments to that series will be approved and Lakeview will cancel the meeting for that series.

The soliciting agent is Laurentian Bank Securities.

Lakeview Hotel Investment is based in Winnipeg and receives income from ownership, management and licensing of hotel properties.

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