(Reuters) – Bankrupt lodging chain Extended Stay America Inc [ESAIN.UL] said investment firms Centerbridge Partners LP and Paulson & Co Inc agreed to invest up to $450 million in the company once it exits Chapter 11.
In a filing on Friday, Extended Stay said Centerbridge and Paulson would invest $225 million in equity and will backstop a $225 million rights offering.
Extended Stay said the money will sponsor a reorganization plan for some of its affiliates, which are currently under bankruptcy protection, without any further due diligence.
The company also filed a reorganization plan and requested that the court set a date for filing the disclosure statement.
The deal does not preclude Extended Stay from negotiating with other plan sponsors, the company said.
Extended Stay filed for protection from creditors last June saying it was “significantly over-leveraged” and that projected cash flows could not service its more than $7 billion in debt.
The case is In re: Extended Stay Inc, U.S. Bankruptcy Court, Southern District of New York, No.09-13764. (Reporting by Santosh Nadgir in Bangalore; Editing by Anne Pallivathuckal)