Report of the Finance Committee Page 10
April 6, 2016
we are extending the term of the note. The key is the subordination to the new loan. That’s what we are trying
to do with all of the lenders. We have an agreement with the second note holder that we have to deliver by
June 30" for this entire transaction and we expect to do that. There is a lot of due diligence and work to be
done to get from tonight to closing but we are on track and we hope to deliver. So what we are asking from the
city is your cooperation with respect to the subordination. There are a series of agreements that we worked
with Attorney Bolton’s office and | would be happy to answer any questions.
Mayor Donchess
So when will the closing take place and when will the city receive the $500,000 to $600,000?
Attorney Prolman
Our goal is to deliver to everyone, to close, be on record and funded by June 30" of this year.
Alderman Clemons
How did that Nashua Holdings Company become involved? Did they acquire a mortgage that you already
had?
Attorney Prolman
They acquired the second position mortgage from a company called Pami Mid-Atlantic. Pami Mid-Atlantic
acquired their interest from HUD which had to insure the property above and beyond the first mortgage
because when Clocktower first opened, after a $30 million dollar investment Clocktower opened in 1991 which
was during a down swing in our economy. The rental income could not support all of the debt so right off the
bat Clocktower got in trouble and had to call upon some HUD insurance. HUD stepped in and takes a position
and then sells their position, that second position to Pami Mid-Atlantic which was an entity owned by the
Lehman Brothers Banking Company and then last year; because of the Leman Brothers bankruptcy they
ultimately sold off that second positon to this company, the Nashua Commercial Loan Holdings. They made
an investment and | have no beef with what they are doing. They want a return on their investment. The
problem is that if they are successful then they wipe out the land/use agreements, the low income housing and
you don’t necessarily have a friendly Clocktower Place anymore.
Alderman Clemons
So this truly is savings of $7 million right from the get go, it’s wiping out what we owed from basically the get
go?
Attorney Prolman
It truly is a savings of the $7 million because we don’t contest that the principal and interest on the second
position is $13 million plus. We agree with that number. For other reasons we don’t agree that Nashua
Commercial Loan Holdings has the right to act upon that. If they take this $6 million and release their position
it really is a huge savings to Clocktower.
Alderman Cookson
Is it more of a cost avoidance than anything else because didn’t you indicate that we are going to get another
$13.5 million loan which is what Nashua Holdings currently has? You are releasing Nashua Holdings and we
are getting a $13.5 million loan. We are then going to pay Nashua Holdings $6 million? Is that correct?
