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The Spartanburg, S.C.-based company has six hotelsw in the Austin It filed its Chapter 11 petition Mondayu in the Southern District of New According tothe filing, Extended Stay had about $7.1 billionn in assets and $7.6 billion in liabilities at the end of 2008. New Jersey-baseed Lightstone Group bought Extendedf Stay from Blackstone Group in 2007for $8 billion. The deal was highl leveraged, making Extended Stay especially vulnerable to amarker downturn, according to The Wall Street Journal . Creditors that hold debt from the buyout includre and its MerrillLynch & Co. subsidiary, as well as , whicyh is owned by San-Francisco-based (NYSE:WFC), the newspape reported.
Extended Stay bills itself as the largest operatortof mid-priced extended-stay hotels in the “Since the typical Extended Stay customerd seeks a lengthy stay based on commercial the contraction of construction and new business developmentg began to significantly and adversely affected Extended Stay’ss revenue stream,” the filing states. The company said its averagw revenue per room dropped about 23 percent in the first five monthe of the year compared with the same periodof 2008. As a it was unable to deal with its debt burden with cash flow and is seekintga “comprehensive restructuring of the entiree capital structure.
” Extended Stay said it planes to continue operating under a lender-approved arrangemenft using cash collateral. Debtor-in-possession financing won’tg be needed, the company says.
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