The Blackstone Group has joined an investor group, led by Centerbridge Partners and Paulson & Co., in a $905m bid for bankrupt hotel chain Extended Stay, according to The Wall Street Journal.
Blackstone plans to invest a reported $100 million for a minority stake in the company – between 10 percent and 25 percent – after it emerges from bankruptcy.
The deal would mark a return to the Extended Stay portfolio for Blackstone, which the hotel chain sold to private equity real estate firm Lightstone Group for $8 billion in 2007. The transaction relied on roughly $7.4 billion of debt, including a $4.1 billion mortgage and $3.3 billion of mezzanine debt. Extended Stay sought bankruptcy protection last June, in one of the largest ever US hotel bankruptcy cases.
Blackstone’s addition to the group of investors vying for Extended Stay is the latest chapter in a bidding war for the 680-property hotel chain, whose board of directors approved a recapitalisation offer from Starwood Capital, TPG Capital and Five Mile Capital last month. That deal, according to the board, would value the company at $3.9 billion post-bankruptcy.
Blackstone’s co-investors Centerbridge and Paulson & Co. had previously made a $450 million offer for Extended Stay, which was terminated when a bid from Starwood emerged. Spokespersons for Blackstone and Extended Stay were not immediately available for comment.