LodgeNet to Enter Chapter 11 Bankruptcy
On Monday, hospitality and health-care industry services provider LodgeNet Interactiveannounced that it will conduct an "expedited Chapter 11 bankruptcy process" whereby the company will enter Chapter 11, restructure its operations, and emerge at the other end wholly owned by a "syndicate" of companies led by global investment firm Colony Capital -- which will pay $60 million to acquire all the equity of LodgeNet.
The company noted that at the restructuring will also provide for payment in full of all pre-petition claims against it by its creditors. Holders of LodgeNet's common stock and Series B preferred stock, however, will be wiped out. The company's existing credit agreement will be amended to extend the company a five-year loan worth $346.4 million plus accrued interest on prior loans.
LodgeNet further noted that it has executed a memorandum of understanding with DirecTV , laying out the terms by which the two companies will "operate as strategic partners within the hospitality and health care markets." DirecTV is one of LodgeNet's current creditors by virtue of its being a licensor, as are Time Warner's HBO unit, Disney's ESPN, and CBS's Showtime.
During the period of bankruptcy, LodgeNet says it will continue to provide services to its current customers. The company has secured $15 million of debtor-in-possession financing from its lenders to ensure its ability to continue to function.
The article LodgeNet to Enter Chapter 11 Bankruptcy originally appeared on Fool.com.Fool contributor Rich Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Walt Disney. Motley Fool newsletter services recommend Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.