IVG Immobilien is to file an application with the Bonn District Court for protection against its creditors, including a raft of private equity and hedge funds, and proceed with a court-supervised restructuring after a €2.1bn debt-for-equity swap vote last night failed.
A near 20-strong consortium of creditors, led by Cerberus Capital Management, Varde Partners, Apollo Global Management and TPG Capital which acquired around a third of the nominally-valued €1.3bn ‘SynLoan I’ syndicate, failed to pass the resolution to consensually restructure IVG’s debt.
IVG’s Board issued a statement today stating that the “application to open protective shield proceedings became unavoidable after the creditor representatives of the various capital levels – SynLoan I / LBBW loan and SynLoan II, convertible bond, hybrid – failed to agree on a joint, comprehensive restructuring plan even after several intensive rounds of negotiations”.
The statement continued: “The target to find the support of all capital levels for the restructuring of the company could not be achieved and this eliminates in the consequence the positive going concern prognosis of the company after a thorough examination.”
The ‘protective shield proceedings’ will help stave-off IVG’s creditors from enforcing over its security collateral under German law, through a process of self-administration.
The application relates exclusively to the parent company of the IVG Group, IVG Immobilien AG based in Bonn. All subsidiaries are unaffected by the proceedings and the operating business continues unchanged.
IVG statement continued: “The Board of Management will continue to drive forward talks with creditors – now under protective shield proceedings – in order to return IVG to a sound financial base. The basis for the realignment of IVG is formed by the restructuring plan already developed and presented to the creditors and the public. The IVG Board of Management will continue to implement the plan swiftly with the support of a preliminary trustee as soon as it is applied by the Bonn District Court.”
Dr Wolfgang Schäfers, CEO of IVG Immobilien AG, said in a statement: “Despite weeks of intensive mediations and negotiations efforts on the part of IVG, the individual creditor groups were unfortunately unable to agree on a consensual solution taking into account all stakeholder interests.
“This is all the more regrettable because essential key shareholders of the company had signalled to support the restructuring plan presented by creditor representatives of SynLoan I / LBBW loan and the convertible bond. The road to agreement by the creditors and thus to a healthier IVG will now take an alternative route – but this changes nothing about our clear target.”
After the restructuring, IVG will seek to continue as a property investor and asset of its own and third-party money
“IVG is in a very good position to bring the proceedings that lie ahead quickly to a successful conclusion,” says Schäfers. “The company has a clear image of its target and knows how to get there. The protective shield proceedings now provide IVG ultimately to come out of the situation stronger than before.”