Filing for Bankruptcy
A company that provides video and internet services to hotels and health sectors has filed for protection under bankruptcy law, and plans to hand over the reins to another business.
LodgeNet Interactive Corp. filed for Chapter 11 protection following an agreement with Colony Capital, in which the latter will provide $60 million in recapitalization funding to the distressed company. The expedited bankruptcy process will make Colony the controlling shareholder, and
it will receive new common stock that represents full ownership. LodgeNet said that the new agreement will allow it to undergo reorganization proceedings without any interruption to its service.
LodgeNet chairman Doug Bradbury said he is pleased with the deal, which will enable LodgeNet to continue providing services to more than 1.5 million hotel rooms nationwide.
"Under Colony's leadership, LodgeNet is poised to transform its business through renewed financial strength, the introduction of new and innovative products and services, and strengthened industry relationships, thus re-affirming its position as the leading provider of interactive services to the hospitality and healthcare industries," Bradbury said.
Bradbury also said that a steering committee of lenders has supported a five-year extension of its $346 million secured credit facility. He expects all unsecured creditors to be paid at the end of the bankruptcy process. Another aspect of the agreement mandates that LodgeNet and DirecTV must operate as strategic partners within both the hospitality and health-care markets. In addition to hotels, the company launched its eSUITE system in 68 medical facilities across the country in 2011.
Roughly 95 percent of LodgeNet's revenue comes from the hotel industry, and Hilton Worldwide and Marriott International accounted for nearly one-third of its sales last year. However, the company has not posted an annual profit since 2006.