WSJ: Starwood Capital To Wrest Control of Extended Stay

(Reuters) – U.S. investment company Starwood Capital Group Global LP is attempting to gain control of lodging chain Extended Stay Inc [ESAIN.UL], the Wall Street Journal said, citing people familiar with the matter.

According to the paper, a group of creditors, led by Starwood Capital, and which also includes Fortress Investment Group LLC (FIG.N) and D.E. Shaw Group, is proposing to buy Extended Stay’s $4.1 billion first mortgage, for $3.5 billion.

The creditors will have to put in more than $700 million in new equity, and ensure that most of the existing bondholders continue to hold their debt in largest owner and operator of mid-price extended stay hotels in the United States, the paper added.

Investors in the Starwood group are existing creditors in Extended Stay, and are at risk of taking substantial losses under the reorganization of the hotel chain, the Journal said.

Representatives of Starwood Capital and Extended Stay could not immediately be reached for comment outside regular U.S. business hours. (Reporting by Biswarup Gooptu in Bangalore; Editing by Lincoln Feast)