Capmark Finance seeks approval to buy, sell $32.89 million of loans

By Caroline Salls

Pittsburgh, May 18 - Capmark Financial Group Inc. requested court approval for Capmark Finance Inc. to buy and sell $32.89 million of bank fund loans made by Capmark Bank to leveraged funds within the Capmark debtors' New Markets Tax Credit business platform, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, Capmark Finance would buy the loans from non-debtor affiliate Capmark Bank and sell them to U.S. Bancorp Community Development Corp. and U.S. Bancorp Community Investment Corp.

Capmark said the purchase and sale of the loans is part of New Markets Tax Credit business transactions approved by the court in February.

Since those transactions were approved, the company said it has been negotiating the purchase of the bank fund loans.

According to the motion, Capmark Finance will pay the total unpaid principal balance for the loans, plus variable-rate interest accrued from the purchase date.

Assuming an Aug. 12 closing, the company said Capmark Finance would pay $35.2 million for the loans, with $25.8 million of the purchase price to be funded with cash collateral that will be returned to Capmark Finance as a result of the purchase. The balance of the purchase price will be paid with unencumbered cash.

Capmark Finance will also obtain the release of an additional $59.7 million of pledged assets, $25.8 million will be applied toward the purchase price.

The loans will then be sold to the U.S. Bancorp entities at a discount of 18% for loans related to qualified low-income community investments (QLICIs) that still need to be reinvested or 5% for loans related to QLICI's that do not need to be reinvested.

The company said the U.S. Bancorp entities are expected to pay a 9.5% discounted price of $27 million for the loans.

The loan sale is also subject to approval of the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions.

A hearing is scheduled for June 7.

Capmark Financial, a commercial real estate finance company based in Horsham, Pa., filed for bankruptcy on Oct. 25, 2009. Its Chapter 11 case number is 09-13684.

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