After an hours-long confirmation hearing and a lengthy break that got the lawyers on the same page, a federal bankruptcy court appears ready to confirm the sale of Oceanwide Plaza.
The City of Los Angeles earlier today pulled its May objection to the KPC-Lendlease JV’s proposed $470 million purchase of Oceanwide Plaza — the three-tower, multimillion-square-foot, unfinished development in the heart of downtown Los Angeles. The joint venture’s offer is mostly a credit bid, as KPC came into the mix via its purchase of another creditor’s claim, and Lendlease was the general contractor.
Earlier this month, the JV filed an answer to the city’s objection. The JV’s response centered on a claim that it needed the certainty of a bankruptcy court’s approval to satisfy the city’s concerns on financing and its ability to complete the long-stalled mixed-use megaproject.
The debtor — the bankrupt Chinese conglomerate under the eye of a chief restructuring officer — made revisions to its plan and refiled last night. The revisions involve the cash component, the closing, a back-up buyer and more that appears to have influenced the city’s change. In the city’s Monday morning motion, it said there are still concerns about the current plan, but the updated provisions made by the debtor changed the game.
The first, that KPC will immediately remove the graffiti after confirmation. That has to be done within 90 days. The second makes way for a back-up buyer. Essentially, the debtor can tap a back-up buyer and give it access to the development once it proves it has the funds. The Real Deal has reported there is an all-cash offer behind the scenes via an investor group that has an agreement with Sean Burton’s Cityview that it would be a fee-based developer.
The chief restructuring officer, during the Monday court hearing downtown, said at least 90 potential buyers signed NDAs, and almost everyone in the industry has toured the development after years of marketing, but no other party has made it as far as KPC.
Another key provision: KPC has six months to close on its proposal, and that can be extended for a limited period without court approval if all the parties agree.
The city is an unsecured creditor and has a say in what’s developed. In the documents, the city said its decision to withdraw its objection is predicated on its determination that the revised proposed plan is more likely to result in an immediate cleanup of the property, which has been called “Graffiti Towers,” and facilitate the substantial completion before the upcoming Olympic Games in Los Angeles.
The city wasn’t the only party to object. But, during the hearing and break, the lawyers talked, and Los Angeles County, United States Trustee and others decided to pull their objections. The agreed-upon changes need to be put on paper, and then the judge can issue her ruling. The hearing ended with thanks and congratulations between the parties.
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