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New York-based ""Centerline Capital Group"":http://www.centerline.com/, a real estate asset management and financial services firm and subsidiary of Centerline Holding Company, announced Monday that it completed a series of transactions with its creditors and preferred shareholders and ""Island Capital Group, LLC"":http://www.islecap.com/, an international merchant banking firm headquartered in New York.
[IMAGE]The transactions eliminated approximately $1.6 billion of aggregate liabilities and contingent exposure and provided more than $100 million of new equity. This restores Centerline to financial stability by substantially restructuring all of its outstanding debt.
Centerline sold its real estate debt fund management and commercial mortgage loan special servicing business to an Island Capital affiliate, C-III Capital Partners, LLC, and recapitalized the majority of the outstanding equity interests in the company. The company also entered into an advisory agreement with an affiliate of Anubis Advisors, a wholly-owned subsidiary of Island Capital. Anubis will provide strategic restructuring and general advisory services to Centerline.
""We have worked closely with Andrew Farkas and the Island Capital team for many months to make this transaction happen,"" said Marc D. Schnitzer, president and CEO of Centerline. ""We believe Island Capital -- with its historical track record of vision and growth -- is the ideal financial and leadership partner to allow Centerline to refocus on our traditional core businesses.
Although Centerline sold several of its businesses to Island Capital, it retains and will continue to operate its core businesses: Low-Income Housing Tax Credit origination, asset management, and affordable and conventional multifamily lending. Centerline remains a public company; however, the nature and composition of the equity interests in the company have changed.
C-III is now the largest holder of common share equivalents, with approximately 40 percent of the outstanding common equivalents. Common Shareholders prior to the transactions retain approximately 20 percent of the outstanding common share equivalents, and essentially all Centerline Community Reinvestment Act and other preferred shares have been exchanged for common share equivalents and now represent about 35 percent of the outstanding common share equivalents.
In addition, the company issued shares representing approximately 5 percent of the outstanding common equivalents to Natixis Financial Products. In total, $341.2 million of liquidation and redemption value preferred shares were exchanged for common share equivalents in Centerline Holding Company.
As a result of the transactions, Centerline amended and restated its corporate credit agreement, reducing its debt from approximately $208 million to $137.5 million and extending the term seven years. The transactions were structured to preserve Centerline's existing net operating loss carryover, which may be considered a potentially valuable asset since it allows current losses to be deducted against future earnings to reduce tax liabilities.
""The reduction in Centerline liabilities delivers value to all our constituents,"" Schnitzer said. ""Closing a transaction of this complexity is a tremendous accomplishment. It restores confidence in those who currently engage in business with us and opens the door for others to invest in new opportunities with a company that has a manageable debt structure in a pervasively distressed economic environment. We enthusiastically look forward to healthy growth and a long future.""
