Cap Cana Deconstructs Bridge

Cap Cana, which late Monday said it came to agreement with lenders of a $100m bridge loan that came due November 19, has given the 6 holders of the facility a 40 cent haircut and assumed the remainder of the debt through a special purpose entity, say people close to the lending group. The 6 investors, which include five hedge funds and one larger institutional buysider, are understood to have received 60 cents on the dollar in cash to sell their holdings in the bridge loan to a Panama-based entity, says an investor familiar with the process. The executive says he believes the entity is ultimately owned by Cap Cana’s controlling shareholder family. “They’re moving assets from the right pocket to the left pocket. It’s all smoke in the mirrors,” says one buysider who seems unhappy about the company’s treatment of creditors. On Monday night, Cap Cana said the bridge loan agreement involved posting certain real estate assets as a payment in kind to the group of new lenders. That suggests new holders of the debt – which presumably includes the Panama-based entity – now control resort properties in addition to holding Cap Cana debt. Having redeemed the bridge, Cap Cana also released properties that were held under the loan agreement. Capa Cana’s IR official did not answer requests for comment. Morgan Stanley and Deutsche Bank led the bridge, which was placed a year ago.