By Stephanie Gleason
Hotel media provider LodgeNet Interactive Corp. (LNET) received
bankruptcy-court approval to access $5 million of its bankruptcy
financing, in addition to a number of other procedural motions that
will allow the company to continue its operations while under
Chapter 11 protection.
A final hearing to provide LodgeNet full access to its
bankruptcy financing, which includes $15 million in new loans and a
$15 million refinancing of prepetition debt, is set for Feb.
27.
LodgeNet, which provides DirecTV (DTV), HBO, pay-per-view movies
and other services in hotel rooms throughout the U.S., filed for
Chapter 11 bankruptcy on Sunday with a plan to hand over the
company to private-equity firm Colony Capital LLC in exchange for a
$60 million infusion of new capital. The plan allows it to pay
unsecured creditors in full and provide a substantial recovery to
secured creditors in the case.
The bankruptcy attorney for LodgeNet, Sylvia Mayer of Weil
Gotshal & Manges LLP, said during the hearing Tuesday afternoon
that the company has received unanimous support of the plan from
the creditors who have voted so far--63% of creditors have voted,
representing 76% of LodgeNet's debt. These percentages are already
high enough to allow for confirmation of the plan.
Judge Shelley Chapman of the U.S. Bankruptcy Court in Manhattan
set a hearing to consider the restructuring plan for March 7, which
keeps the company on track to complete its reorganization within 60
days.
The company, which provides cable and Internet services to 6,800
hotels in the U.S. and Mexico, including Hilton Worldwide, Marriott
International Inc. (MAR) and Starwood Hotels & Resorts
Worldwide Inc. (HOT), said that its revenues have been hurt by the
entrance of tablets and mobile devices into the mainstream, in
addition to lingering effects of the financial crisis which
affected travel and consumer spending.
Customers' access to movies and television shows on mobile
devices led to a decline in the number pay-per-view movies ordered,
the company said. Also, the number of hotel rooms that provide its
services has fallen to 1.5 million, from two million during
2009.
As part of the restructuring, LodgeNet also negotiated a new
partnership with DirecTV, which is LodgeNet's largest unsecured
creditor and one of its most important vendors, the company said.
DirecTV agreed to support the restructuring and will assume some
installation costs so that LodgeNet can continue to provide DirecTV
cable to its customers.
The company claimed $291.7 million in assets and $448.7 million
in liabilities in its bankruptcy petition.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Write to Stephanie Gleason at
stephanie.gleason@dowjones.com.
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