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Subsequent Events
9 Months Ended
Sep. 30, 2014
Subsequent Events [Abstract]  
Subsequent Events

 

Subsequent Events

 

On October 15, 2014, we sold a Days Inn in Sioux Falls, South Dakota (Empire) (79 rooms) for gross sale proceeds of $2.4 million. Net proceeds were used to reduce debt with GE.

 

On October 17, 2014, we sold an unencumbered Days Inn in Shreveport, Louisiana (148 rooms) for gross sale proceeds of $1.3 million. Net proceeds were used to reduce the balance of the revolving credit facility with Great Western Bank.

 

On October 18, 2014, the Company agreed to sell four hotels which collateralize borrowings from GE for a total purchase price of $15.15 million.  All of the GE loans are cross collateralized and the 17 assets securing the loans outstanding at September 30, 2014 are treated as a pool. If the four assets currently under contract are sold, the Company believes that the net proceeds from the sale of these hotels will be sufficient to satisfy the debt with GE that matures in December 2014. The sale is subject to the completion of a contingency period for inspections and investigations of the hotels.  If the hotels are not sold, the Company will attempt to extend or refinance this debt with GE or some other lender. If we are unable to extend or refinance this GE debt, we may be forced to sell the hotels on disadvantageous terms, or we could be compelled to file for reorganization.

 

On November 6, 2014, we sold a Super 8 in Terre Haute, Indiana (117 rooms) for gross sale proceeds of $1.9 million. Net proceeds were used to reduce the debt with GE.

 

Our credit facilities with Great Western Bank require us to maintain a consolidated leverage ratio (as defined in the loan agreement) of 4.25:1 or less. As of September 30, 2014, our consolidated leverage ratio (as defined in the loan agreement) was 4.30:1. On November 12, 2014, the Company received a waiver for non-compliance with this covenant as of September 30, 2014. The Company currently anticipates that it will not be compliant with respect to this covenant as of December 31, 2014.  In the event the Company is not in compliance with this covenant, the Company will seek a waiver from the lender.  Although the Company has received waivers from lenders in the past with respect to covenants, there is no assurance that the Company would be successful in obtaining waivers in the future.