A huge consortium of private equity funds, hedge funds and debt investors will vote on IVG Immobilien’s €2.1bn debt-for-equity swap proposals within the next 48 hours, with an outcome possibly as early tomorrow morning.
Cerberus Capital Management, Varde Partners, Apollo Global Management and TPG Capital are the lead owners in a giant consortium of almost 20 creditors seeking to agree a consensual debt-for-equity conversion of the €1.3bn ‘SynLoan I’ syndicate which would enable IVG to avoid a court-supervised restructuring.
Cerberus, Varde, Apollo and TPG own around one-third of the nominally-valued €1.3bn ‘SynLoan I’ – which was acquired last month at around a 20% discount – while Aurelius Capital Management LLP, US hedge fund, BlackRock and Third Avenue Management all owning stakes in the €400m convertible bond.
Aurelius and BlackRock were previously opposed to the debt-for-equity swap, but are understood now to have come round to the restructuring proposal.
The ‘SynLoan I’ debt was acquired from Dresdner Kleinwort, Barclays Capital, DZ Bank, German Central Cooperative Bank, Frankfurt Main, Eurohypo AG, Landesbank Baden-Württemberg, Landesbank Hessen-Thüringen, the Royal Bank of Scotland and WestLB AG.
IVG Immobilien, the beleaguered German property group, outlined preliminary terms 10 days ago which would see their debt convert into equity, alongside bondholders in the €400m convertible bond, reflecting a respective 80:20 ratio.
At the same time, existing shareholders would see a ‘cramdown’ of their equity, while the €400m hybrid bondholders would be virtually wiped out – both sharing an undefined proportion of a 3% of IVG’s new equity, with existing shareholders required to pay an undefined amount of cash to subscribe in the new capital stack.
Effectively, existing shareholders have seen the value of equity virtually entirely written off, with their shares having been crammed down by 200 to one.
LBBW’s €100m senior loan, which matured in April, will not be converted to equity and it is instead intended to extend for an undefined duration.
The SynLoan I syndicate will further provide €140m of short term liquidity during the reconstruction period, although it is unclear how or when this will be repaid.
IVG, which listed in 1986, has seen its share price has fallen drastically since its all-time high of €36.60 in February 2007 to €0.15 at lunchtime today.
IVG is being advised by Rothschild.