NEW YORK ( The Deal) -- A Puerto Rico golf course that licenses the Trump brand has filed for Chapter 11 bankruptcy protection, seeking a sale of all of its assets to stalking horse OHorizons Global LLC for $2.04 million.
Coco Beach Golf & Country Club S.E., which rebranded its property as the Trump International Golf Club Puerto Rico through a 2008 licensing deal, filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Puerto Rico in Old San Juan on Monday.
It also filed motions to approve an asset purchase agreement with OHorizons and bid procedures for the sale of substantially all of the debtor's assets.
Debtor counsel Charles Cuprill, a sole practitioner, said on Monday afternoon that no hearing dates had been set since a judge had not yet been assigned to the case.
Neither Republican presidential candidate Donald Trump nor Trump Organization has ownership in the golf and country club. The facilities are owned by Coco Beach Development, Coco Beach Holdings and R3 Development.
The debtor seeks approval of OHorizons as stalking horse for the sale of the golf course assets with the debtor to pay creditors the proceeds from the sale. The stalking horse has agreed to submit a $75,000 deposit on a sale for $2.04 million plus assumption of contracts and payment of cure costs. Subsequent bids at auction would require offers of a minimum $50,000.
Under the bid procedures motion, OHorizons would receive a breakup fee of $60,000 and an expense reimbursement of up to $50,000.
The debtor seeks a bid procedures order within 30 days of its motion. A bid deadline would be set within 45 days of approval of the bid procedures order.
It would seek an auction to be held five days following the bid deadline, if there is more than one qualified bidder. The stalking horse would be named successful bidder if no other qualified bids are received. A sale hearing would be held within five days of a successful bidder being named.
The debtor expects to close the sale by March 31, 2016.
The debtor claimed in court papers that it needed to file for Chapter 11 protection after facing substantial diminution in its cash flow due to Puerto Rico's adverse economic situation, which has reduced tourism. The golf club owner said it has been unable to raise sufficient income to remain competitive.
The debtor had defaulted on its $26.4 million in secured revenue bonds that were issued by the Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority, a Puerto Rican government agency commonly known by its Spanish acronym, AFICA. The bonds have maturities between June 20, 2012, and Dec. 20. 2034, and interest rates ranging between 2.25% and 6.6%.
AFICA provided the bond proceeds to Coco Beach for a March 2011 refinancing, with the golf club required to make payments to cover the principal and interest. AFICA is only required to make bond payments through loan repayments from the golf club. However, the tourism agency has been covering the payments anyway.
The bonds are secured by the mortgage on Trump International Golf Club.
The debtor listed $9.2 million in assets and $78 million in liabilities in its petition. The golf course facilities had an appraised value of $1 million as of May 14, according to court papers.
The debtor listed gross income of $1.1 million in the first quarter and $3.08 million last year.
The debtor's largest unsecured creditors include the Puerto Rico Tourism Development Fund (owed $32.6 million), McConnell Valdes ($117,172), Internal Revenue Service ($115,717), Agro Servicios ($109,362) and PR Electrical Power Authority ($91,588).
Trump International Golf Club occupies 1,000 acres in Rio Grande, Puerto Rico, near San Juan. The property has two 18-hole golf courses, a 46,000-square-foot clubhouse, cart barn and maintenance building. The golf courses were designed by PGA professional touring golfer Tom Kite.
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