CRIIMI MAE Reaches Agreements With Two Major Creditors; Agrees to Split Net Cash Flow From CMBS Collateral With Merrill Lynch And German American Capital Corporation
ROCKVILLE, Md., Dec. 7 /PRNewswire/ -- (NYSE: CMM) - CRIIMI MAE Inc. has reached agreements with two of its major creditors, Merrill Lynch Mortgage Capital Inc. (Merrill Lynch) and German American Capital Corporation (GACC), under which the company and these creditors will split the monthly cash flow after debt service from 13 classes of CRIIMI MAE's subordinated commercial mortgage-backed securities (CMBS). The total current monthly cash flow before paying floating-rate, LIBOR-based debt service is approximately $5.0 million. The Merrill Lynch agreement has been preliminarily approved by the Bankruptcy Court, and the GACC agreement has been submitted to the Bankruptcy Court for approval. CRIIMI MAE had financed the acquisition of the 13 classes of CMBS with $452.3 million of loans from these two creditors. CRIIMI MAE and two affiliates filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code on October 5.
"Without lengthy court proceedings, these agreements help to resolve certain disputed issues with two of our major lenders and assure a continuing flow of income as CRIIMI MAE reorganizes," said Chairman William B. Dockser. "We are continuing to negotiate with our other creditors," though Mr. Dockser gave no assurance that CRIIMI MAE would reach agreements with the other creditors.
As part of the agreement with Merrill Lynch, CRIIMI MAE is dismissing without prejudice its October 21 lawsuit asking the lender to turnover funds the company charged Merrill Lynch had wrongly withheld. For its part, Merrill Lynch is dismissing without prejudice its motion for relief from the automatic stay in the bankruptcy proceedings.
Under the agreement with Merrill Lynch, CRIIMI MAE will receive approximately $1.5 million representing the October distributions from eight classes of CMBS collateralizing the loan from Merrill Lynch net of October's interest payment to Merrill Lynch. For subsequent months, the agreement calls for CRIIMI MAE to receive distributions of 50 percent of the monthly cash flow from the CMBS, net of interest payable to Merrill Lynch. Merrill Lynch will apply its half of the net distribution to pay down the outstanding principal balance of its loans to CRIIMI MAE.
Under the agreement with GACC, CRIIMI MAE each month will receive approximately 50 percent of the cash flow from the CMBS collateralizing the loan from GACC, net of interest payable to GACC. GACC will apply the remaining 50 percent to, among other things, hedge costs and to pay down the outstanding principal balance.
Before filing for reorganization, CRIIMI MAE had been actively involved in acquiring, originating, securitizing and servicing multifamily and commercial mortgages and mortgage related assets throughout the United States. Since filing for Chapter 11 protection, CRIIMI MAE has suspended its loan securitization, loan underwriting and loan origination businesses. The company, however, continues to hold a substantial portfolio of subordinated CMBS and, through its servicing affiliate, acts as a servicer for its own as well as third party securitizations.