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The Spartanburg, S.C.-based company has seveb hotels in the Charlotte It filed its Chapter 11 petitioj Monday in the Southern District ofNew York. Accordinv to the filing, Extende Stay had about $7.1 billiojn in assets and $7.6 billion in liabilities at the endof 2008. New Jersey-basec Lightstone Group bought Extended Stay from Blackstons Group in 2007for $8 billion. The deal was highlt leveraged, making Extended Stay especially vulnerable to amarkef downturn, according to The Wall Streeg Journal . Creditors that hold debt from the buyoug include and its MerrillLynch & Co. as well as , which is owned by San-Francisco-based the newspaper says.
Both BofA and Wachovia are based in Extended Stay bills itself as the largest operatorof mid-priced extended-stay hotels in the “Since the typical Extended Stay customefr seeks a lengthy stay basesd on commercial relocation, the contraction of construction and new business development began to significantly and adverselyy affected Extended Stay’s revenue stream,” the filing The company says its average revenus per room dropped about 23 percent in the firstf five months of the year compared with the same periodd of 2008.
As a result, it was unabld to deal with its debt burden with cash flow and is seekin ga “comprehensive restructuring of the entirw capital structure.” Extended Stay said it plans to continu e operating under a lender-approved arrangement using cash Debtor-in-possession financing won’t be needed, the company says.
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