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Extended Stay backs new proposed offer: source
April 5, 2010 / 3:34 AM / 8 years ago

Extended Stay backs new proposed offer: source

NEW YORK (Reuters) - U.S. hotels firm Extended Stay is favoring a new planned bid for it from investment companies Centerbridge Partners and Paulson & Co over a rival one on the table from a group led by Starwood Capital Group, a source familiar with the situation said on Sunday.

The Starwood-led group had agreed to invest up to $905 million in Extended Stay America ESAIN.UL as part of a reorganization proposal to bring the hotel chain out of bankruptcy protection.

The Centerbridge/Paulson bid is slightly better economically than the Starwood one, the source said, although the details of what made the bid superior were not clear.

The Wall Street Journal, which earlier reported the developments, said the Centerbridge/Paulson group had promised not to charge fees.

However, the situation could change again, as an auction will be held in May for the hotel chain, the source said.

It was not possible to leave a message at offices for Paulson or Extended Stay outside business hours. Centerbridge could not immediately be reached for comment. Starwood declined to comment.

Extended Stay was bought in June 2007 by an investor group led by David Lichtenstein’s Lightstone Group. It was forced into bankruptcy last year after its projected cash flows declined amid the recession and it could not keep servicing more than $7 billion in debt.

In February, Centerbridge and Paulson & Co agreed to invest up to $450 million in the company once it exits Chapter 11.

However, Starwood Capital said in March it submitted a bid which exceeded that offer, and the hotel firm switched its support to that offer.

Editing by Muralikumar Anantharaman

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