Cap Cana Buys Time As Lenders Squirm

Cap Cana, the high-end Caribbean resort, has put a thin band-aid on a worrisome situation surrounding a $100m bridge loan that came due November 19. Miguel Guerrero, Cap Cana’s director in corporate finance and IR, tells LatinFinance the company has extended the maturity date of the bridge by six weeks until December 29, thereby avoiding a default that would have triggered cross default clauses on the company’s outstanding bonds. The group of lenders holding the bridge has also changed, says the executive. At least one of the six asset managers – understood to include five hedge funds and one larger mutual fund – said they wanted to sell down their position in the bridge loan, preferring to take a haircut today over holding their portion for an indefinite period of time, say executives familiar with the process. The new composition of the lending group is unknown. “This is positive news because it demonstrates willingness on both sides to remain at the table,” says one executive familiar with the company but away from the talks. Market participants have in the past weeks come to question Cap Cana’s willingness to meet its debt obligations, which has helped keep its bonds trading in the low 20s. The company warned on November 12 it was preparing itself for a cross default event thanks to worsening market conditions that have made it impossible to refinance the bridge. Cap Cana has hired Weston Financial Group to advise it on its debt negotiations.