|By Linda Conley, Herald-Journal,
Spartanburg, S.C.McClatchy-Tribune Regional News
May 29, 2010 --Extended Stay Hotels will begin the process of exiting bankruptcy in the weeks ahead after Centerbridge Partners and a group of investors bought the local hotel chain for almost $4 billion.
An auction on Thursday, held at the law firm of Weil, Gotshal and Manges LLP in New York, extended into the early morning hours on Friday before the purchase was completed. Centerbridge Partners, Paulson and Co., and the Blackstone Group provided a $3.925 billion cash bid for the struggling hotel business.
The purchase ended months of maneuvering between the group led by Centerbridge Partners and a team of investors led by Starwood Capital Group. Both formed a variety of partnerships with other investors to come up with financing to pay for their bids.
"HVM is gratified that this phase of the asset sale has been completed and looks forward to working with Centerbridge Partners, Paulson and Company, and Blackstone Group in the days and weeks ahead as a Plan of Reorganization is finalized," said Gary DeLapp, president of HVM LLC, the management company that operates Extended Stay Hotels, in a written statement.
A bankruptcy court judge will have to approve the sale before it is finalized. Lazard, a New York-based financial advisory firm handling Extended Stay's bankruptcy, will have to file a disclosure statement and plan to get the hotel chain out of Chapter 11 bankruptcy protection. A hearing could come as early as next month.
An adviser with Lazard said the process could take between 90 to 120 days before the hotel chain emerges from bankruptcy. Last year, Extended Stay filed for bankruptcy protection because of a decline in business due to the weak economy and a $7.4 billion debt.
No comments were given on whether the hotel chain will move its headquarters from Spartanburg or cut any of the 165 employees based here.
Extended stay has about 680 hotels in North America and employs about 10,000 people.
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