For immediate release
August 18, 2010
More than 1,500 jobs now hang in the balance as Columbia Sussex may default on $1 billion in loans
Washington, D.C. – Today, AFL-CIO Executive Vice President Arlene Holt Baker joins more than a hundred hotel workers affiliated with UNITE HERE at Bank of America in Washington DC, demanding that Bank of America honor the taxpayers’ generous bailout of their company and protect hotel jobs. More than 1,500 hotel jobs are now at stake, with the potential default of $1 billion in loans made by Bank of America to Columbia Sussex, for the acquisition of 14 hotel properties nationwide.
In 2005, Bank of America and Bear Stearns loaned hotel company Columbia Sussex $1.1 billion for the acquisition of 14 hotels. Recently, these loans were transferred to special servicing owing to what Fitch Ratings describes as "imminent default." Bank of America as Special Servicer has significant control over the workout. The loans mature October 12, 2010.
Workers at the Sheraton Baltimore City Center—one of 14 hotels that Columbia Sussex purchased with the loan—have faced a variety of cuts, including layoffs, benefit reductions, pay freezes, higher costs for health insurance, and work speed-ups in the wake of their hotel’s acquisition by Columbia Sussex. Now hotel workers face the possibility of further hardships and layoffs with Columbia Sussex’s loans possibly going into default. These workers have been represented by many years by UNITE HERE Local 7.
Hotel workers are asking Bank of America to protect their jobs regardless of how the troubled debt is ultimately worked out.
"It’s been a rough few years with all the cuts from Columbia Sussex, but now I just hope Bank of America saves my job," says Karl Taylor, who has worked Sheraton Baltimore City Center for 11 years, and has lost half his income since Columbia Sussex took ownership of the hotel due to cuts.
"Wall Street must fix this economic crisis by helping to create the jobs they destroyed," said AFL-CIO Executive Vice President Arlene Holt Baker. "Now Bank of America has a real opportunity to save the jobs of Columbia Sussex hotel workers. We call on them to do the right thing – and give the working families who helped to bail them out – a fighting chance."
The Federal Reserve Bank of New York owns a portion of the debt as a result of buying Bear Stearns mortgage related assets with taxpayer funds in 2008. Bank of America received $45 billion under the Troubled Asset Relief Program.