MSR Hotels gets stalking horse bid for resort marks under stipulation

By Caroline Salls

Pittsburgh, Dec. 5 - MSR Hotels & Resorts, Inc. entered an agreement with MS Resort Purchaser LLC and 450 Lex Private Ltd. and its affiliates (GIC RE) regarding the sale of the company's resort marks, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

MSR Hotels said it has worked with GIC RE, the current owner of its resorts, since before filing for bankruptcy regarding a potential stalking horse bid for MSR Hotels' resort marks.

Although GIC RE was the most natural purchaser for the resort marks, MSR said the sale efforts were impeded by litigation and affected by GIC RE's claims of equitable ownership of the resort marks, coupled with GIC RE's purchase of the beneficial interests in MSR Hotels' secured debt.

Now that the Five Mile litigation is complete and significant efforts were made by all parties to resolve the remaining contested issues, the company said MS Purchaser and GIC RE have agreed on the settlement and stalking horse bid.

Under the stipulation, GIC RE has agreed to serve as the stalking horse bidder for the resort marks under the company's Chapter 11 plan, with a $5.5 million cash offer, subject to higher or better bids.

GIC RE, by virtue of its indirect beneficial interest in the resort marks, has also agreed to an allocation of 80% of the first $10 million in sale proceeds and 90% of any sale proceeds in excess of $10 million to be paid to the resort marks secured lender.

According to the motion, GIC RE has agreed to turn over any sale proceeds it receives in excess of $12 million, net of up to $500,000 in expenses.

The parties have also agreed to mutual releases.

MSR said the allocation and releases are valid regardless of whether GIC RE is the winning bidder or if the Chapter 11 case is converted or dismissed.

The stipulation is subject to court approval. A hearing is scheduled for Dec. 20.

MSR Hotels, a New York-based real estate investment trust, filed for bankruptcy on May 8, 2013. Its Chapter 11 case number is 13-11512.

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