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Meruelo Maddux Saved? Major Settlement Said to Be In the Works

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Downtown landlord Meruelo Maddux, in Chapter 11, and trying to defend itself from two vicious takeovers by two different entities, reached a settlement deal with one of its creditors--Legendary Investors Group and East West--according to the Wall Street Journal. As part of the deal, Legendary will assume ownership of seven properties in return for swapping a significant amount of debt. We'll post the properties as soon as we know which ones Legendary picked up. Perhaps Legendary decided to take J Lounge in South Park? Free fuzzy navel shots for life!
From the WSJ: "As part of the agreement, Legendary and fellow lender East West Bancorp Inc. will drop their rival takeover plan that would have pushed out the company's senior management, including Chief Executive Richard Meruelo. Legendary had earlier acquired all of East West's interest in Meruelo Maddux loans. The deal removes a major road block to Meruelo Maddux gaining court approval of its Chapter 11 plan, which keeps existing shareholders in control and repays creditors either through the sale of the properties or a refinancing of their debts.

A plan confirmation hearing is scheduled for Thursday.... Under the settlement deal, Legendary will assume seven Meruelo Maddux properties on which it currently holds mortgage loans. The most valuable of those properties is the $29 million Sky Arc property, a 7.9-acre site where 635 residential units were planned."( This is a property that is adjacent to architectural school Sci-Arc, which is also embroiled in Meruelo's Chapter 11 filing since the school leases its site from the developer.)

But the deal doesn't mean Meruelo Maddux is out of the woods: "However, the company's plan still faces a challenge from a second competing plan that minority shareholders put forth. That plan from Charlestown Capital Advisors LLC and Hartland Asset Management proposes to pump $30 million into Meruelo Maddux, including $23 million for the purchase of 55% of the existing shares."
· Meruelo Maddux Deal Removes Bankruptcy Exit Plan Challenger [WSJ]