Realogy, a company that owns the Corcoran Group, Coldwell Banker and Century 21, said this week that it had raised $515 million in new loans, 30 percent of which were from Carl Icahn, according to an article by Josh Kosman in today's edition of The New York Post.
The company plans to use $365 million of the proceeds, according to the article to reduce senior debt that had required that its debt load be no more than five times its cash flow.
Leon Black's Apollo Management had purchased Realogy in 2007 for about $7.7 billion.
"Icahn earlier this year bought $311 million in Realogy loans at roughly 40 cents on the dollar," according to the Post article, "and under the deal announced this week Icahn is selling $91 million of that back to Apollo at about double what he paid, according to a source familiar with the matter. On top of that, Icahn is swapping $220 million of the junior debt he holds for $150 million of newly issued notes that are more secure and pay a higher interest rate."
"Long-term," the article continued, "Realogy still faces problems. The debt-to-cash-flow ratio is tested every quarter, and starting in April 2011, the ratio falls from 5 to 4.75. What's more, Realogy has only cut its overall debt by $70 million, leaving it on the hook for $6.3 billion that now commands a higher interest rate."
The company plans to use $365 million of the proceeds, according to the article to reduce senior debt that had required that its debt load be no more than five times its cash flow.
Leon Black's Apollo Management had purchased Realogy in 2007 for about $7.7 billion.
"Icahn earlier this year bought $311 million in Realogy loans at roughly 40 cents on the dollar," according to the Post article, "and under the deal announced this week Icahn is selling $91 million of that back to Apollo at about double what he paid, according to a source familiar with the matter. On top of that, Icahn is swapping $220 million of the junior debt he holds for $150 million of newly issued notes that are more secure and pay a higher interest rate."
"Long-term," the article continued, "Realogy still faces problems. The debt-to-cash-flow ratio is tested every quarter, and starting in April 2011, the ratio falls from 5 to 4.75. What's more, Realogy has only cut its overall debt by $70 million, leaving it on the hook for $6.3 billion that now commands a higher interest rate."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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