Marriott bondholders set to expand their lawsuit Move would allege breach of contract

March 02, 1993|By Bloomberg Business News

NEW YORK -- A group of Marriott Corp. bondholders led by PPM America Inc. said yesterday that it's preparing to expand its lawsuit against the hotel company, a spokesman for the bondholders said.

The group decided to broaden the lawsuit because another group of bondholders represented by Goldman, Sachs & Co., which had been expected to sue the company, failed to do so, the spokesman said.

The litigation would be expanded to include new claims alleging fraudulent conveyance, breaches of contract and fiduciary duty, and other broad-based claims against Marriott.

Marriott is in discussions with the group of institutional bondholders represented by Goldman Sachs. The PPM-led group said it wanted to provide an option for bondholders who expressed dissatisfaction with the prospect that the Goldman group no longer intended to sue Marriott.

Last week, a group of the nation's biggest investment institutions was close to an agreement with Marriott on its proposed restructuring plan, according to investors in the group.

Marriott said Oct. 5 that it planned to divide the company's assets between two entities. Marriott International Inc., owner of the company's profitable hotel management business, would hold little debt. Host Marriott Corp. would be left with money-losing real estate and airport and toll-road concessions and $2.9 billion of debt.

The PPM group, which filed suit in October to block the restructuring, is charging Marriott with violating securities laws. The group claims Marriott knew about its planned restructuring before it sold bonds last April and failed to disclose the plan.

Investors in the group, which include Wellington Fund and Transamerica Life Insurance & Annuity Insurance Co., bought two series of bonds totaling $200 million each last spring.

Marriott asked the court to throw out the complaints. The talks with the PPM-led group and a group of creditors who filed a class-action suit against Marriott broke down last month. A hearing on Marriott's motion is scheduled for April 8 in U.S. District Court in Baltimore.

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