|By Mark Belko, Pittsburgh Post-GazetteMcClatchy-Tribune Regional News |
Nov. 13, 2010--The former Hilton Pittsburgh, struggling to make ends meet without a hotel flag, will get an infusion of cash to help it through the winter.
Lawyers for Shubh Hotels Pittsburgh LLC, owner of what is now called the Grand Pittsburgh Downtown, and lender BlackRock Financial Management Inc. reached agreement Friday on a $1.35 million loan to get the hotel through the next three weeks.
Scott Hare, a Shubh attorney, said the loan amount probably would increase to $2.7 million or $3 million once longer term budgets are finalized in preparation of the winter season, typically a slow period for hotels in Pittsburgh.
"This is sort of presuming a worst case scenario," he said.
Mr. Hare said Grand Pittsburgh Downtown had suffered without a hotel flag, or franchise, and a central reservation system.
Hilton Hotels & Resorts terminated its franchise license agreement with Shubh in September, and BlackRock declared Shubh in default of its $49.6 million mortgage. BlackRock moved to foreclose, then Shubh filed for Chapter 11 bankruptcy protection.
In negotiations Friday, BlackRock agreed to provide the loan after Dr. Kiran C. Patel, the Tampa, Fla., cardiologist seeking to take over the hotel, offered to lend up to $500,000.
BlackRock also had made an offer to Shubh for a loan, but a Shubh attorney described the initial terms as "overwhelmingly onerous" and "rapacious."
However, more favorable final terms were worked out Friday, clearing the way for BlackRock to become the lender.
In documents filed Friday, Shubh estimated that the hotel could be $2.7 million in the hole by the end of February without a loan.
While the winter season is typically a slower time for hotels, attorneys for Shubh and Dr. Patel argued that the lack of a flag also had had an impact.
In a filing Friday, Dr. Patel's attorneys stated that every day the Grand Pittsburgh Downtown remains without a franchise, it costs the hotel 21 to 25 percent in lost bookings and revenues.
Dr. Patel is seeking to rebrand the hotel as a Wyndham Grand under Wyndham Hotels and Resorts as part of his reorganization plan.
U.S. Bankruptcy Court Judge Jeffery A. Deller has requested briefs from the parties by Monday on whether Wyndham should become the new franchise for the hotel. He is expected to rule after receiving those papers.
BlackRock has opposed the appointment of Wyndham, arguing that the chain is inferior to Hilton.
Mark Belko: email@example.com or 412-263-1262.
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