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LOS ANGELES-Meruelo Maddux Properties has stopped making interest and principal payments on and likely is in default on 26 loans totaling $266 million, the publicly held company reported Thursday in a conference call and public filings for its fourth-quarter and full-year 2008 results. The company, which is seeking loan workouts with four lenders on loans that total approximately $177.8 million, said that it is unsure whether the lenders will agree to workouts and is considering a number of strategic options, including a voluntary Chapter 11 bankruptcy filing.

Meruelo Maddux continues to make interest payments on four other loans, including the construction loan for its 35-story, 214-unit apartment tower that is under way at 717 W. Ninth St. in Downtown L.A. It said that it is actively marketing many of its projects to raise cash, but its earnings statement points out that “Selling properties in this environment is difficult.”

The company began 2009 with $4.5 million in unrestricted cash, according to its public filings and statements, but it requires approximately $1.8 million in cash to satisfy monthly principal and interest payments on the 26 loans. That means that unless the company raises cash via asset sales or otherwise, it has only the $4.5 million in cash, which would cover approximately 2.5 months of payments.

Under the circumstances, “There may be substantial doubt about our ability to continue as a going concern,” the company said. It expects to receive a “going concern” opinion from its independent auditors in its annual report, which is slated to be filed soon.

Meruelo Maddux also has cut staff and has suspended all substantial development efforts, except for the 717 W. Ninth St. project. It says that other measures it will pursue include improving cash flows from operations, reducing carrying costs, trying to refinance or extend existing loans and generating cash from property sales.

In its conference call, the company reported a net loss of $85.8 million and 98 cents per share for the three months ended Dec. 31. For the full year, it reported a net loss of $96 million and $1.11 per share.

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