Panama’s investor community is closely following the news as Panama’s iconic development, Trump Ocean Club goes through the restructuring of its debt. $220 million in bonds were issued in 2007 to build this luxury project, and the developer defaulted on the bond repayment in November 2011. We at Punta Pacifica Realty have been receiving countless calls from investors expressing their concerns as talk of Newland filing Chapter 11 in US bankruptcy court continues to make news. As the property management company representing the largest group of investors in the project we want to provide reliable information based on facts rather than opinion.
The reality is that this is a re-structuring strategy necessary for the bondholders to move forward under new terms. According to Gary Lundgren, an investor closely associated with the project and who serves on the Board of Directors for the Trump Ocean Club project: “The USA Chapter 11 Newland bankruptcy only affects the bonds and NOT the building.”
The reality is that if 96-100% of the bondholders accept the restructuring proposal, then the Chapter 11 bankruptcy is not necessary because the only purpose of the bankruptcy is to force the terms of the restructured bonds onto the non-consenting bondholders. The bondholders have until 5:00 pm on April 29th to accept or reject the bond-restructuring plan.
It’s extremely unlikely that 100% of the bondholders will accept a restructuring exchange offer, so the Chapter 11 process is necessary to force the restructuring terms on dissenting "holdout" bondholders. The US courts appear to only have jurisdiction over the Newland bonds because US law, as structured in the indenture, governs them. This Chapter 11 process is a pre-arranged and pre-negotiated restructuring plan under the laws of New York
Trump Ocean Club continues to be recognized as Panama City’s premier luxury resort providing solid rental returns for residential owners. Punta Pacifica Realty is Panama’s leading property management company managing the vast majority of residential apartments in the resort and working with the large multinational companies to ensure their executives have the opportunity to enjoy the exclusive Trump lifestyle.