|Monday, March 25, 2019|
|Borrower||Atlantic Gulf Communities Corp., a Florida-based developer of master-planned communities.|
|Loan||A two-year revolving credit facility of $32 million at 11%, a three-year term loan at 15%, a two-year standby letter of credit for $7.5 million, and (later) a DIP loan of $2 million.|
|Collateral||The loan was secured by liens on all of the borrower's real estate, mortgages, and joint ventures, subject only to construction finance on some of the developments.|
|Guarantors||All of the borrower's subsidiaries guaranteed the loan.|
|Purpose||The loan was needed to redeem a publicly-held Note which was due, and to re-finance all of the borrower's corporate-level debt. The borrower's re-financing arrangements collapsed when its lender refused to fund at the time of the "Long Term Capital Fund" crisis, and we were able to arrange and syndicate this complex loan within two months.|
|Exit strategy||The borrower planned to pay down the revolving credit facility from retail and bulk sales of land, and to refinance the term loan on or before maturity.|
|Outcome||The revolving credit facility was paid down on schedule,
and the standby letter of credit was not drawn upon. The Term Loan went into default, and
the borrower sought protection under Chapter 11 of the US bankruptcy code.
In connection with this we made the DIP loan.
When the borrower's two large projects were lost in foreclosure it was clear that they would not be able to emerge from Chapter 11 with a viable business, so the case was converted into a Chapter 7 liquidation. We are supervising the liquidation of the assets. The DIP loan was repaid in full with interest.
So far the assets have yielded about 116% of the principal amount of the Term Loan. We expect to get as much as 35% of the principal by way of interest.
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