Yahoo Finance Landlord Adler Strikes Deal With Bondholders to Overhaul Debt
(Bloomberg) -- German landlord Adler Group SA has struck a deal with a majority of bondholders to refinance debt and inject more liquidity to the embattled company in what would be its second debt overhaul in the past two years.
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As part of the proposal, the landlord’s debt maturities will be extended to December 2028, December 2029 and January 2030, according to a statement from the company on Friday. Meanwhile, the majority of the second-lien notes will be converted into subordinated perpetual notes, comprising a total €3 billion ($3.25 billion) of new notes.
The company will also receive up to €100 million in new money from an upsizing of the first-lien debt facility, according to the statement. The agreement will also allow for proceeds from property sales of up to €250 million to be held back, which would otherwise go toward paying down the existing highest-priority debt.
Adler was forced to overhaul its debt after the residential landlord struggled to raise sufficient cash through property sales amid plunging valuations. Adler faced considerable opposition from creditors to its debt restructuring last year, with holders of its longer-dated debt successfully appealing the plan in court which they argued treated them unfairly.
In the latest debt deal, Adler said each second-lien bondholder would be treated equally “regardless of their respective maturities.” As part of the agreement, bondholders would also be entitled to receive voting securities representing in total 75% of Adler’s voting rights, the company said in a separate statement.
Read More: Adler Creditors to Take Control as Its Fire Sale Fizzles
AGPS Bondco, the current issuer of the second-lien notes, will launch a consent solicitation to amend the notes, as well as a UK restructuring plan in case it cannot receive the requisite consents to complete the deal, the company said. The bondholders, which have already signed a lock-up agreement with Adler, hold around 60.5% of these notes.
The troubled real estate company has been under pressure since short seller Viceroy Research and a whistle blower accused it of fraud more than two years ago — allegations the firm has strongly rejected. They alleged that controversial tycoon Cevdet Caner, whose family invested in the landlord, was secretly pulling the strings without holding any official role.
Other details on the debt overhaul:
Existing €937.5 million secured loan facility originally due in June 2025 will be increased by up to €100 million and extended to December 2028
This first-lien facility will accrue payment-in-kind amounts at a rate of 12.5% and include the potential to refinance €300 million Adler Real Estate GmbH bonds due April 2026
The €400 million secured notes due July 2025 issued by AGPS BondCo and the €191 million secured notes due July 2025 issued by Adler Group will be refinanced by two secured 1.5-lien facilities due in December 2029
One accrues 4.25% payment in kind until July 2025 and 14% thereafter and the other 14% from issuance
A new special purpose vehicle will replace AGPS Bondco as the issuer of the second-lien notes; second-lien notes will be consolidated into a single series of pass-through notes issued by the special purpose vehicle
The voting securities offered to holders of the special purpose vehicle notes will have no dividend distribution rights, will be freely transferable and not linked to any other instrument
Existing ordinary shares of Adler Group will represent the remaining 25% of the voting rights, and 100% of the dividend distribution rights
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