Ciena Capital, the New York-based real estate lender, filed for voluntary bankruptcy protection today blaming the credit crisis for a “significant” deterioration in the value of its assets.
Ciena, a portfolio company of publicly listed private equity fund manager Allied Capital, said in its bankruptcy filing that its assets had declined to such an extent in the wake of the credit market dislocation that Chapter 11 protection was the best course of action.
Allied Capital said in a statement that bankruptcy would prevent the company from having to sell assets “in today’s unfavorable market conditions”, but allow “maximum recovery for creditors”.
Allied had guaranteed Ciena’s revolving credit facility after acquiring the company, formerly known as Business Loan Express, in 2000. The firm is expecting to pay $320 million (€222 million) to lenders, according to a statement, roughly half from cash resources and the remainder borrowed on an unsecured basis.
Allied said it expected to record a “substantial” write down on its investment in Ciena. “The amount and timing of any future realized loss on its investment in Ciena will depend on future asset sales, future market conditions and the outcome of Ciena's bankruptcy proceedings.”
Ciena, which provided up to $10 million in commercial real estate loans, and 10 affiliates had between $100 million and $500 million of both assets and liabilities, according to the bankruptcy filing.
Allied has been a publicly traded company since 1960 and has approximately $5 billion in assets. The firm has investments in 120 portfolio companies.