Chastain Capital Comments On Effect of Current Market Conditions
ATLANTA--(BUSINESS WIRE)--Oct. 23, 1998--Chastain Capital Corporation (Nasdaq/NM:CHAS) today made several announcements regarding the effect of current market conditions on its operations.
As a result of recent credit market conditions, the Company's portfolio has experienced estimated losses of $32.0 million due to spread widening, which adversely affected the value of the Company's portfolio. Due to the Board's decision to discontinue new investment activity and the current volatile interest rate environment and its effect on the Company's hedge exposure, the Company has terminated its interest rate hedges resulting in a $13.5 million loss. As a result of the above, the Board has concluded that the Company needs to be restructured.
As a result of these losses, the Company would be in default of the tangible net worth covenant under the Company's credit facilities with Morgan Guaranty Trust Company, Merrill Lynch Mortgage Capital and Morgan Stanley Mortgage Capital. The Company has received a waiver of this default for a period of 10 business days from Morgan Guaranty and Merrill Lynch. The Company currently has no borrowings outstanding with Morgan Stanley Mortgage Capital and does not expect to draw funds under the facility. Accordingly, the Company did not seek a waiver of the default. During the 10 business day period, the Company will continue to negotiate with Morgan Guaranty, Merrill Lynch and with other sources of capital to provide the Company sufficient liquidity to fund its obligations, including its outstanding whole loan commitments. The Company currently has outstanding whole loan commitments in an aggregate amount of approximately $111 million.
Finally, the Company announced that it intends to release its results for the quarter ended September 30, 1998 during the week of October 26, 1998. |
