Lenders backing the $1.8 billion sale of a Manhattan skyscraper to Kushner Cos can breathe easy this week.

That’s because the real estate giant just paid down a $200 million loan — in cash. But all those Benjamins may leave others in commercial real estate a bit queasy.

After all, Kushner didn’t refinance the debt — and how many landlords can pay down borrowings in cash?

Commercial property investors see repayment of the loan, used to finance Kushner’s nearly $2 billion acquisition of 666 Fifth Avenue last year, as a bellwether for markets hit by a downturn and tightening credit — which have made it tough for landlords to refinance deals or generate cash flows for debt payments. That doesn’t bode well.

“The refinancing market is a little disturbing, to say the least,” Kushner President Kevin Swill told Reuters on Monday.

Kushner, which also owns New York’s Puck Building, has made headlines before — like when a 25-year old family scion bought the New York Observer for $10 million in 2003.

But all eyes are now on New York developer Harry Macklowe, who paid $7 billion to Blackstone for several New York office buildings — and reportedly owes $5 billion in short-term financing next month.

It may be tougher coming up with that much in cash.

(Image: 666 Fifth Avenue in New York. Reuters file)

High rollers are heading to New York City next week. 
 
That’s where Harrah’s is launching the sale of loans backing its $17 billion buyout — and lead arranger Bank of America is expecting so much action at the lenders’ meeting that, according to one amused lender, it even asked for an “RSVP” in the invitation. 
 
Lenders’ meetings aren’t usually so precious. After all, buyside shop analysts are normally the only ones trying to get in.

But with the credit crunch sidelining the leveraged loan market, banks have been saddled with billions of the risky loans — forcing write-downs and grinding buyouts to a near halt. So a lot of people — private equity folks, shareholders or even, say, journalists — may want to sit in on the Harrah’s offering, which is one of the first large LBO loans to be marketed this year, with a total deal size of $27.8 billion including debt.  
 
The last time a lenders’ meeting became such a spectacle was with loans backing to the First Data buyout in September. But with credit markets now in much worse shape and bankers still stuck with a $150 billion leveraged loan pipeline, Harrah’s could get even more attention. Or so BofA seems to think. 

The meeting is scheduled for Tuesday morning at the Hilton in Rockefeller Center, according a lender who made the cut. But don’t show up without an RSVP.

(Image credit: www.harrahs.com)

Hopes of unloading some $20 billion in mortgage-backed buyout financing this quarter seem a bit far fetched on Wall St. After all, there hasn’t been a buyout-backed CMBS offering in months.

But under the threat of further writedowns, bankers have lined up an aggressive first quarter schedule for syndicating CMBS used to finance LBOs — including a $9 billion offering related to Blackstone’s Hilton buyout, which would be the largest CMBS issuance ever. 

Wishful thinking? Looking at the size of the offerings below, it sure seems that way. Here are the buyout-related CMBS issuances planned for the first quarter, according to Credit Suisse.

(Image: Hilton Hotels sign displayed above Sydney building. Reuters file)

Ruling on the busted buyout of United Rentals by Cerberus, chancellor William Chandler III of Delaware’s Court of Chancery really shows off what an education in liberal arts can do. 

“In classical mythology, it took a demigod to subdue Cerberus, the beastly three-headed dog that guarded the gates of the underworld. In his twelfth and final labor, Heracles journeyed to Hades to battle, tame, and capture the monstrous creature,” Chandler points out in the ruling.

“In this case, plaintiff United Rentals, Inc. journeyed to Delaware to conquer a more modern obstacle that, rather than guards the gates to the afterlife, stands in the way of the consummation of a merger,” he continues.

Chandler, who majored in political science at the University of Delaware, also notes that in Hesiod’s Theogony, “Cerberus is characterized as a relentless, fifty-headed, flesh-eating, brazen-voiced hound.” Here’s hoping he rules next on Apollo.

(Image credit: Hercules and Cerberus; UVM)

The Michigan court order temporarily halting the Manor Care buyout is here. A hearing on the matter, which Reuters reported first on Thursday, is scheduled for 10:00 AM EST on Friday.

Update: In a subsequent hearing, a Michigan judge lifted the halt to the deal, which is expected to close on Friday.

Chemical company Chemtura has hired Merrill Lynch to advise on its sale — again. 

Reuters was first to report in October on a quiet Merrill-run auction for Chemtura, which failed to find a buyer despite reported interest from private equity firms like Apollo. 

Will the Connecticut-based company, which has since streamlined through job cuts, plant closings and assets sales, be more appealing this time? Buyout firms have been largely sidelined by credit markets, but Chemtura is also considering selling select businesses. The company, with a market cap of about $1.7 billion, makes specialty chemicals for the agriculture, pool, construction and packaging industries.

Merrill should hope things go well – with activist investor Nelson Peltz a shareholder and his firm’s co-founder on Chemtura’s board, patience with the process may run out.

(Photo credit: Chemtura cleaning products)

Blackstone’s decision to float shares of Travelport on the London Stock Exchange could be the start of a rush by private equity firms to list portfolio companies abroad.

That’s partly due to the declining greenback combined with favorable offering environments overseas.

Blackstone decided to list New Jersey-based Travelport in London because of its overseas operations, favorable valuations and fewer offering-related regulations, sources told Reuters. That criteria, if applied to the hundreds of recent U.S. LBOs, suggests that dozens of companies may be candidates for an eventual overseas listing.

Using the considerations above, one example Reuters came up with after a quick look at recent U.S. LBOs is Avaya, the Web-based communications company that TPG and Silver Lake bought for $8 billion in October.

That company, which was previously listed on the NYSE, generates nearly half of its revenue outside the U.S. — and in February acquired another firm listed on London’s Alternative Investment Market.

And Avaya has partnered previously with Vonage, the Internet phone company that now trades at about $2 per share after an IPO last year on the NYSE for $17 per share.

It’s probably too soon for TPG and Silver Lake, who both declined to comment, to have thought very much about their eventual plans for Avaya — but given those numbers, when it comes time to exit Avaya, an overseas listing may be among their considerations.

(Image: A pedestrian walks past the London Stock Exchange. Reuters file.) 

Reliance Industries, the largest Indian listed company, would think big if it went shopping abroad, according to its international oil business president.

“It would be a very major acquisition, whatever we do,” Atul Chandra told the Reuters India Investment Summit. “Acquisitions could be in excess of $10 billion to $15 billion.”  

Reliance, which has a market cap over $100 billion, owns the world’s third largest refinery and hopes eventually to produce about 300,000 barrels per day of oil overseas.

(With Nishant Kumar; image: Atul Chandra, Reuters file.) 

Is buyout financing so scarce that private equity firms would rather spend the next few months with government bureaucracies than skittish lenders? That could be the case for the Fortress-led group buying Penn National.

Although the $6.1 billion buyout was announced in June, an extensive multi-state licensing process should keep bankers from hitting debt markets for months — which could be welcome news with lenders leery of LBOs, particularly in the commercial mortgage backed securities market.

Since Reuters wrote last month that the CMBS (commercial mortgage-backed security) portion of Carlyle’s Manor Care buyout has investors concerned about the whole $6.3 billion deal, shares of the nursing home operator have dropped 3 percent to $64 — below the $67 offering price, despite the company’s assurance that closing was on track.

With the outlook uncertain for commercial property loans, the group buying Penn National may hope that regulators take their time. 

(Image credit: wired.com)

Regarding Cerberus pulling out of the $4 billion takeover of United Rentals, Reuters has obtained a request by Steve Mayer of Cerberus to discuss agreement terms and the company’s response that there is “no basis for any discussion.”

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