Marriott names a new trustee for its bonds

November 11, 1992|By Bloomberg Business News

WASHINGTON -- Marriott Corp. has appointed a new trustee for its bonds after First National Bank of Chicago quit as trustee amid controversy about the hotel company's proposed restructuring.

Marriott chose Banc One, Columbus, NA, an affiliate of Banc One Corp., as trustee for the hotel company's $1.87 billion of publicly held senior debt, said Nick Hill, a spokesman for Marriott. The bank is a trustee for more than 1,000 bonds issued by other corporations.

First National Bank of Chicago resigned because it decided that it "can best fulfill its fiduciary duty to bondholders by resigning its trusteeship," a spokeswoman for First Chicago said Monday.

A trustee is hired to represent the interests of investors.

Marriott's proposed reorganization plan sparked outrage from bondholders, who have organized to block the plan, asserting that Marriott violated securities laws. Marriott's Mr. Hill said the company continues to represent the best interests of bondholders.

Marriott said on Oct. 5 that it would split in two, leaving Marriott International Inc. with a clean balance sheet and the company's lodging, food, and facilities-management operations. A weaker concern, Host Marriott Corp., consisting of real estate and airport and railroad concessions, would be saddled with $2.9 billion of the company's debt.

News of the restructuring turned the bonds from investment-grade securities into high-risk, or junk, bonds. The bonds plunged 30 percent, leaving investors unsure of how much the bonds would be worth in case of further downgrades.

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