Offer made for hotel plan

Starwood Capital Group LLC said in a bankruptcy court filing Saturday that it made a binding offer to sponsor a reorganization plan for Extended Stay Inc., the operator of more than 680 long-term lodging properties in 44 states.

Greenwich-based Starwood said its proposal is "far superior" to the offer from Centerbridge Partners LP and Paulson & Co. to pay $225 million for 22.5 percent of the new equity.

Starwood made the disclosure in a court filing to oppose approval of a breakup fee for Centerbridge and Paulson if a better offer eventually wins out. The hearing on the breakup fee will be held today. Starwood didn't provide details on the plan it is willing to finance.

Starwood contends there is no reason for a breakup fee because its binding offer has a larger investment of new cash equity. Starwood also says its offer will give a distribution to all creditor groups.

On Friday, Extended Stay's examiner filed his report under seal.

The examiner, former bankruptcy judge Ralph Mabey, said that nearly all of the information he obtained from third parties was received under confidentiality agreements precluding public disclosure. Mabey said all of the report should be made public. He previously scheduled a hearing on April 8 for the bankruptcy judge to establish procedures for making the report public.

Mabey was appointed amid allegations that the Chapter 11 case was commenced to wipe out some creditors improperly.

The hearing April 8 also will consider approving the disclosure statement explaining the Chapter 11 reorganization plan. If approved, the confirmation hearing for approval of the plan is tentatively scheduled May 26.

In addition to the equity they would buy, Centerbridge and Paulson are offering to backstop a $225 million rights offering for 22.5 percent of the new equity. Holders of mortgage debt are to receive 55 percent of the equity, plus new mortgages notes for $2.55 billion.

Extended Stay's original plan was opposed by junior creditors who argued it would wipe them out improperly. The company said it realized during the course of the Chapter 11 case that the plan wouldn't work because the company needed new capital to survive.

Extended Stay's petition listed assets of $7.1 billion against debt totaling $7.6 billion, including $4.1 billion in mortgage loans and $3.3 billion in 10 different mezzanine loans.