W2007 Grace Acquisition I, Inc. (fka WGCBP)

[56Chevy]

Things Are Looking Up For W2007 Grace Acquisition I, Inc. Preferred Holders

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Analysis

Grace will benefit from industry-wide macro trends. The construction of new hotel rooms remains at historic lows and will most likely remain low for some time. This lack of new competition allows existing hotels to raise room rates as the economy slowly improves. The properties become valuable.

At some point, Whitehall will be looking for an exit strategy. It may take several more years. However, it appears that work has already begun.

Grace announced on September 17, 2012 that a sister company had acquired approximately 35 percent of the outstanding Series B and Series C preferred shares. The release went on to say that this sister company and its affiliates (including Grace) may also from time to time consider entering into one or more other transactions with respect to the company, including the acquisition or disposition of securities of, or interests in, the company (including additional transactions with respect to the Series B and Series C preferred shares).

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These two series of preferred stock stand in the way of Whitehall monetizing its investment in Grace. It is also not hard to envision the sister company or even Grace announcing a tender offer to buy preferred shares at a discount from liquidation value (par plus accrued dividends) down the road.

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