Gilroy
– Bonfante Gardens has finalized the sale of 32.9 acres of land
to Shapell Industries, a critical step in reducing the
horticultural park’s debt load and continuing its path to financial
recovery. The plan allows the park to slash its current debt load
of roughly $70 million to a more-manageable $
12.5 million.
Gilroy – Bonfante Gardens has finalized the sale of 32.9 acres of land to Shapell Industries, a critical step in reducing the horticultural park’s debt load and continuing its path to financial recovery. The plan allows the park to slash its current debt load of roughly $70 million to a more-manageable $12.5 million.
Park officials have declined to disclose the exact sale price of the land, but have said they will use the money to buy back outstanding bonds from senior bondholders and creditors – those whose loans are secured by the park’s assets – and offer discounted returns to unsecured investors.
Senior bondholders have agreed to sell back $14.9 million of the park’s debt at a reduced rate of $12.6 million, while secured lender Raley’s grocery has agreed to accept $2.2 million for its $9.1 million in loans.
Under the terms of the plan, unsecured creditors agreed to accept a return of less than three cents on the dollar – a payout of $900,000. The majority of the $33.8 million in unsecured debt is owed to park founder Michael Bonfante, his wife Claudia, and Bonfante Nursery Inc.
Michael Bonfante has declined to comment on the arrangement.
Officials expect the bond tender to be complete by early June. Payments to unsecured creditors will go out immediately.
The land sale allows the park to keep up with twice-a-year interest payments, which in May were expected to exceed $1 million to senior bondholders. The debt reduction will mean the next payment, due in November, will be a fraction of the amount.
Shapell Industries plans to use the land, located on the eastern edge of the park, as a northern adjunct to its gated Eagle Ridge housing and golf community, off Santa Teresa Boulevard. Shapell’s plans call for 118 new homes on the property.
