Crescent Resources Files Plan of Reorganization and Expects to Emerge from Bankruptcy in Second Quarter 2010
Plan will Reduce Company’s Debt and Enhance Capital Structure Supported by Significant Group of Company’s Lenders
Palm Coast, FL – February 1, 2010 – The parent company of Palm Coast area real estate developer LandMar Group has filed a plan for reorganization under chapter 11 bankruptcy. Crescent Resources and certain of its subsidiaries plan to emerge from bankruptcy during the second quarter of 2010.
CHARLOTTE, N.C.–(BUSINESS WIRE)–Crescent Resources today announced that the Company and certain of its subsidiaries have filed a Plan of Reorganization (the “Plan”) and Disclosure Statement with the U.S. Bankruptcy Court in the Western District of Texas, Austin Division. The Plan is supported by a significant group of the company’s pre-petition lenders.
Crescent expects to emerge from its financial restructuring with a significantly improved balance sheet and with substantially less debt. Under the terms of the Plan, the Company’s outstanding secured debt would be reduced by approximately $1 billion to $465 million. In addition, Crescent is currently soliciting proposals for an exit financing facility of approximately $125-150 million, the proceeds of which will refinance outstanding Debtor-in-Possession borrowings, fund exit costs and provide significant working capital.
Andrew Hede, Chief Executive Officer and Chief Restructuring Officer of Crescent Resources said, “The filing of our Plan of Reorganization marks the final stage in the restructuring process, and we expect to emerge from bankruptcy early in the second quarter of 2010. The plan will provide for a significantly deleveraged capital structure with greater financial flexibility to execute our business plan and operate the company long-term. We appreciate the support of our lenders, vendors, customers, employees and partners during this process.”
Hede continued, “With a restructured balance sheet, solid financial foundation and strategic focus on core and high-value assets, Crescent will emerge as a stronger company that is better positioned to compete and serve our customers. While we are beginning to see positive signs of recovery in each of our business units and each of our markets, we continue to anticipate a gradual recovery over the next 12 -18 months. The capital structure contemplated in our Plan is correctly sized for current market opportunities. I am confident we have both the financial flexibility and strategy to succeed.”
Significant terms of the Plan include:
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Holders of prepetition secured debt will receive a combination of reinstated debt and 100% of the equity of the reorganized company.
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General unsecured creditors of the company shall receive an interest in a litigation trust to be formed as part of the Plan.
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Various project level lenders shall have their existing debt reinstated.
Crescent Resources, LLC and certain of its subsidiaries filed for protection under Chapter 11 of the U.S. Bankruptcy Court in the Western District of Texas, Austin Division on June 10, 2009.
About Crescent Resources
Crescent Resources, LLC, is a land management and real estate development company with interests in 10 states in the southeastern and southwestern United States. Based in Charlotte, Crescent Resources is a joint venture between Duke Energy and the Morgan Stanley Real Estate Funds. Established in 1969, Crescent creates mixed-use developments, award-winning country club communities, single-family neighborhoods, apartment and condominium communities, Class A office space, business and industrial parks and shopping centers. Visit www.crescent-resources.com for more information.
So Duke has it back
The 1.2 Billion that Duke Energy sold 49% of Crescent Resourses to J P Morgan back in 2008 is now worth half of the sale price, and a little less than a quater is still owed to creditors. That makes them the majority owner, with a asset value re established as positive when you add up the assets and subtract the debts. All those investors in J P Morgan took the loss, as did Duke, but Duke has the ability to right off the loss as a net tax gain against earnings from the energy business. They probably will use that as an excuse to rise cost to customers and recover the entire amount. What was the court to do, besides turn it back over to the giant Duke? No one else showed up, as they would of had to bid against Duke who already had an equity position.
Debts exceeded Assets ?
The on the books debts v asssets is the basis for determining bankrupty viability, as is the money to pay for it. The assests being overstated during a sale, gets a better interest and price as whitness by Credit Swiss dealings. The sale Crescent Resourses 49% to Morgan Stanley investment group by Duke Energy in 2008 was a calculation of values done by values established by future earnings potential that brought the 1.2 Billion in for it. The drop in asset value at bankruptcy to push it to less than debts to make the bankruptcy work, is also calculated and although reviewed by courts is subjective and therefore the bigger the assets the easier it is to fudge the numbers. The courts have to use the asset and debt figures and rely on the "experts" to do the steps to reconciliation, and final liquidation or emergence from the procedure to a new base for restart of accounting after the resolutionand final closure of the proceeding. Here we can only look to one known valuation, the Grand Haven Golf Course, and it’s court stated asset value of just over $2.5 million, when the local county appraiser says it’a worth over $5 million. Of course here again is the "experts" subjective opinion of value as determined by projected incomes, as Golf courses are valued in many cases, if they are the "highest and best" use of the property. But the argument would be perhaps the land and buildings would bring a higher valuation if sold for other than use as a Golf Course. Other assets too can be valued at liquidation prices or at market valuations, which bring different values. Duke Energy is the mother of Crescent resources and has the wear with all to finance it out of the bankruptcy, as is Credit Swiss in it’s many investments that have fallen to the below stated asset valuations of the past. I guess it’s just like buying an old vehicle and redoing it to sell again, after someone gave up on it. Capitalization after all, is the way business works. You just wonder if the effort to stay liquid could have been done with more prudent management, just like the old vehicle could have been better taken care of.