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Redstone Inn, now Redstone Properties, and Redstone Corporation <br />each had term loans of $500,000. In addition, Minerals agreed to <br />pay a S2 million loan origination fee. The obligations of <br />Minerals and its subsidiaries to Sanwa were cross - guaranteed by <br />the corporate affiliates and cross - collateralized with their <br />assets. <br />Although Resources started the lending relationship <br />with Sanwa with only $3.5 million of debt, Resources borrowed <br />more sums from Sanwa, including a second term loan in November <br />1989, in the amount of $7.5 million, and a third term loan in <br />November 1990, in the amount of $ 2.5 million. By the time of <br />Resources' bankruptcy filing in February 1992, Resources' direct <br />obligations to Sanwa totalled $19.7 million, and the obligations <br />of other corporate affiliates which were guaranteed by Resources <br />brought the total obligation to $28.7 million. Each piece of the <br />Sanwa debt is itemized on Resources' bankruptcy schedules. <br />Sanwa's Current Claims <br />Resources' term loans and revolving credit line, in the <br />total amount of $19.7 million, were declared to be in default and <br />due and payable in August 1991. However, Sanwa agreed that <br />Resources' default on those loans will not trigger a cross - <br />default on Coal & Coke's loans. Coal & Coke agreed that its <br />obligation under its guarantee of Resources' loans will be <br />amortized at the rate of $45,000 per month in 1992 and $212,000 <br />per month in 1993 through November 1, 1995. The remaining <br />balance of $11.9 million then would be due in full. Coal & <br />Coke's term loan and revolving credit lines are due in full on <br />May 1, 1993. <br />With the Sanwa debt ballooning in 1993 and 1995, I <br />anticipate that Minerals and Coal & Coke will need to have some <br />negotiations with Sanwa prior to the balloon dates, and that the <br />existing repayment schedule may be extended as a result of such <br />negotiations. <br />The Coal & Coke revolving credit line has, since the <br />filing of Resources' bankruptcy schedules, increased from $5.9 <br />million to $8.7 million. I believe that the post - petition <br />increase could not be charged against Resources, notwithstanding <br />Resources' pre - petition guarantee of Coal & Coke's revolving <br />lines. <br />Several events have occurred which reduce the amount of <br />Sanwa's claims from the $28.7 million total listed on Resources' <br />bankruptcy schedules. First, Sanwa has a claim for a loan <br />origination fee in the amount of $2 million, which will be <br />reduced by $1.5 million with the proceeds of the distribution <br />from Columbine Power Services, discussed above. Second, Coal & <br />-4- <br />