The Distressed Debt Alert

Maurin Joins Perella Weinberg Restructuring Group

Investment bank Perella Weinberg Partners hired Sebastien Maurin as a managing director in its corporate advisory group, focusing on restructuring and distressed mergers and acquisitions.

Maurin has 21 years of investment banking experience, focused mainly on advising clients in restructuring, distressed and leveraged situations, Perella Weinberg said. Maurin, who is based in London, was most recently a senior member of the debt restructuring business at MPC Longberry. Prior to that, he was head of the global high-yield and distressed debt proprietary trading group at Commerzbank AG.

Earlier in his career, Maurin was a founding member of the European high-yield team at Lehman Brothers where he developed the research effort.

Source: Press Release

Bear Island Paper Co., an Ashland, Va.-based subsidiary of White Birch Paper Co., filed for Chapter 11 bankruptcy.

White Birch Paper and 10 of its Canadian subsidiaries simultaneously filed for bankruptcy under the Companies' Creditors Arrangement Act in Montreal.

Bear Island is the guarantor of $437.8 million in first lien debt and $104 million in second lien debt owed to Credit Suisse and Merrill Lynch, as well as $50 million owed on a revolving asset-backed loan with GE Capital, according to court filings. About $51.5 million in payments remain outstanding on interest rate swap agreements with Credit Suisse, Merrill Lynch, and Toronto Dominion Bank.

Bear Island has secured $140 million in debtor-in-possession financing from Credit Suisse, which will fully pay back the asset-backed loan to GE Capital. The interest rate on the DIP loan will be the greater of one-year LIBOR index or 2%, plus 10% per year. The loan carries a 2.5% arranger fee and a 2.5% initial fee.

Source: Court Filing

Investors in TCW Group Inc.'s funds withdrew $25 billion after chief investment officer Jeffrey Gundlach was terminated in December, Bloomberg News reported.

Source: News Story

Commercial banks and savings institutions suffered one of their worst years on record in 2009 and the troubles are expected to continue through this year, the Federal Deposit Insurance Corp. said in a report.

FDIC Chairman Sheila Bair said at a press conference that the 140 bank failures last year were the most in 17 years. More problems could be ahead for this year as more that 700 banks are currently on the FDIC's problem list.

The FDIC's Quarterly Banking Profile for the fourth quarter said a severe decline in lending led to a 7.5% drop in outstanding loan balances over the past year. The decline was the most since 1942. Several factors contributed to the lending decline, including tightened lending standards, weakened consumer and business demand and banks reducing loan balances to deleverage and improve capital ratios.

The banking industry earned less that $1 billion in the fourth quarter and $12.5 billion for the whole year, with 29% of institutions reporting annual losses, according to the report. That was the highest percentage in the 26 years that data for all institutions are available.

Source: Transcript and Press Release

Anthony Princi, a former partner in law firm Paul Hastings' New York and London offices, joined Morrison & Foerster as a partner in the firm's bankruptcy and restructuring practice in its New York office.

Source: Press Release

The number of banks nearing failure continued to rise and the Federal Deposit Insurance Corp.'s deposit insurance fund fell sharply into the red during the fourth quarter, the Wall Street Journal reported.

Source: News Story

The commercial real estate market will not begin to recover until 2011, as lagging effects of the recession will keep vacancies rising and rents falling, the National Association of Realtors forecast.

NAR said in a research report said that it expects vacancy rates in the office sector will rise from 16.3% in the fourth quarter of 2009 to 17.6% in the fourth quarter of 2010. Rents are projected to drop by 7.2%. Industrial vacancy rates may rise by one percentage and industrial rents may fall by 9.6%.

Retail vacancies are projected to rise slightly by 0.3 of a percentage point to 12.7%, with rents declining 2.4%. Multifamily vacancies are expected to buck the trend, with vacancies declining by 0.8 of a percentage point to 6.6%. Multifamily rents are expected to decline by 3.4%.

Source: Press Release

Commercial real estate suffered its worst annual capital return on record with a negative return of 23.9% in 2009, according to an index kept by research firm Investment Property Databank.

Since the commercial real estate market peaked in December 2007, the total capital return has been a negative 33.4%, according to IPD's US Quarterly Property Indicator.

IPD also said that continuing pressure on cap rates and weakening rental fundamentals are curbing optimism that the market will recover this year. Cap rates softened by 140 basis points in 2009, ending at 7.1%, according to the index. That was the highest level in six years.

The value of commercial real estate in New York, Washington and Chicago declined by slightly less than the broader U.S. market, while San Francisco and Los Angeles declined more severely, IPD said.

San Francisco's market values fell the most of those five cities: 4.1% over the fourth quarter and 27.5% over the year. Washington's market values fell by 180 basis points less than the U.S. market average for the year, ending at 22.1%. Chicago had the smallest quarterly decline at 2.1%.

Source: Press Release