Portman Restructures Huge Debt

Developer John C. Portman Jr. announced the bittersweet conclusion Monday of a multibillion-dollar debt restructuring involving more than 50 banks and investors.

As expected, creditors forced Mr. Portman to place virtually all he owns - properties from Atlanta to Shanghai - in a collateral pool to secure loans by about 20 banks.

But the bank group has agreed to pump $8.25 million of new working capital into Mr. Portman's operations and to let his company retain ownership and management of its most significant properties.

Fraction of Realty Deeded to Banks

Only about 8% of his properties had to be deeded to individual banks, Mr. Portman said, including an office building in northwest Atlanta, an industrial warehouse, a few parcels of undeveloped land, and some minority partnership interests.

A jubilant Mr. Portman said the outcome wasn't as bad might have been expected, given press coverage. "They talked about the dismantling of the empire," he said.

The restructuring of $2 billion in debt was necessitated in the summer of 1990 when some of his banks canceled unsecured credit lines. These banks were under increased pressure from regulators to secure their real estate loans, Mr. Portman said.

One Big Creditor: Citicorp

Among the largest of the unsecured creditors was Citicorp, which had accepted a personal guarantee on about $78 million of a $375 million construction loan for Portman's One Peachtree Center office project, which is being built in Atlanta.

In a prepared statement, Citicorp Real Estate said the restructuring gives Portman the ability to continue operating while letting participants in the bank group "appropriately share the risk as well as optimize their returns."

Other big bank lines reportedly included a $140 million construction loan from First Chicago Corp.; a $152 million loan by First Chicago and Swiss Bank Corp; and a $132 million construction loan by Security Pacific Corp.

Workout Group's Other Banks

Others in the workout group included Bank of Boston, the Marine Midland subsidiary of Hongkong and Shanghai Banking Corp. and Chemical Banking Corp., according to banking sources.

A joint venture of Equitable Life Assurance Society of the United States and Nippon Life Co. separately restructured a $322 million mortgage on a six-building complex in Atlanta late last year. The partners took a 75% stake in the project and granted $25 million of new financing for improvements to the complex, sources said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.