Cap Cana hurting

[NewsWhore]

The Cap Cana real estate development is experiencing difficult times. Recently Cap Cana announced they would lay off 1,500 workers and recent news released by the group is more troublesome. Diario Libre is reporting that talks with lenders of a US$100 million bridge loan arranged by Morgan Stanley and the Deutsche Bank have broken down. Negotiations by shareholders to reschedule the loan, which matures on 19 November, were insufficient to satisfy creditors. Reports indicate that shareholders had tried to inject large amounts of capital in order to stave off defaulting on the loan and had tried to offer lenders alternative. None of it was enough. Cap Cana has tried to cut costs by reducing its workforce, outsourcing jobs and ceasing "non-essential" activities, but it hasn't been enough. Though the international financial crisis has definitely had an effect on Cap Cana's fortunes, it is also thought that bad business dealings could be at fault for the recent news. This disclosure comes only weeks after Fitch Ratings downgraded Cap Cana's rating on US$250 million senior acquired notes from 'B' to 'CCC/RR4.' The rating is placed in the Rating Watch Negative. On 31 October Business Wire reported that the inability to access capital markets coupled with a significant decrease in property sales has created a lack of liquidity for the project, which is expected to severely constrain its ability to continue normal operations. A default on the bridge loan facility would trigger a cross default to the $250 million senior secured notes due 2013. Cap Cana is looking for alternative financing, including a bailout by the government, but this option seems unlikely.
See: www.marketwatch.com/news/story/Fitch-Downgrades-250MM-Cap-Cana/... (http://www.marketwatch.com/news/story/Fitch-Downgrades-250MM-Cap-Cana/story.aspx?guid={3652956D-E961-4CE7-B281-CAC309FBA9DC}) and www.marketwatch.com/news/story/Cap-Cana-Announces-Break-Down/... (http://www.marketwatch.com/news/story/Cap-Cana-Announces-Break-Down/story.aspx?guid={36FBEBEB-0ED5-4C86-9376-996CBDB9F772})

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