Eagle Hospitality gets approval to access $9.31 million of DIP loan

By Sarah Lizee

Olympia, Wash., Jan. 22 – Eagle Hospitality Real Estate Investment Trust unit EHT US1, Inc. gained court approval to access $9.31 million of a proposed $100 million debtor-in-possession credit facility, according to an interim order filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

Before Thursday’s order, pre-petition administrative agent Bank of America, NA had filed an objection to the DIP motion.

The agent said the debtors sought the DIP financing mainly to pay professionals and upstream entities with “only a fraction” going to preservation of the debtors’ Propco assets.

“This is troubling,” BofA said. “The debtors have offered only platitudes for needing 12 months to consummate a 363 sale. They have offered no quantification of the benefit at each individual debtor Propco for the granting of liens to secure the DIP financing or proof that the pre-petition lenders, who hold equity pledges that are being effectively/structurally primed, are adequately protected.”

The facility provides that an additional $25 million will be made available in the event that the debtors reopen one or more existing hotels during the pendency of the Chapter 11 cases, as previously reported.

The debtors will use the proceeds of the DIP facility to fund their restructuring efforts, including the marketing and sale of substantially all of their assets, and the administration of the debtors’ Chapter 11 cases.

Wilmington Trust, NA is the administrative agent. The lenders are one or more funds managed by Monarch Alternative Capital LP.

The facility will mature on the earliest to occur of 12 months after the closing date, 45 days after the entry of the interim DIP order if the final order has not been approved by then, the effective date of a plan, five business days after the sale of substantially all of the DIP collateral, and the date the DIP agent or the date that all outstanding obligations are accelerated following an event of default.

Interest will be Libor plus 675 basis points, subject to a 0.5% Libor floor.

Singapore-based Eagle Hospitality owns a portfolio of corporate, leisure and airport hotels across the United States. U.S. affiliate EHT US1 filed Chapter 11 bankruptcy on Jan. 18 under case number 21-10036.

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