The holders of Adler Group SA’s longest dated bonds failed to back the company’s debt restructuring proposals, a blow to its attempt to avoid a fire sale of its assets.
(Bloomberg) — The holders of Adler Group SA’s longest dated bonds failed to back the company’s debt restructuring proposals, a blow to its attempt to avoid a fire sale of its assets.
The embattled landlord secured the requisite 75% threshold required for all of its bonds except the holders of its 2029 notes, according to a statement Tuesday. The plan would have given the company two years to dispose of properties and pay down debt.
“In light of our ongoing intensive and constructive talks with the bondholders, we are highly confident that an alternative implementation route will enable us to implement the agreed deal in due course,” Chief Executive Officer Thierry Beaudemoulin said.
Adler Chairman Stefan Kirsten said last month that the company had “various routes to move forward” if the plan did not win enough support. One option the landlord previously said it was weighing is a German insolvency act known as StaRug.
Other processes considering include restructuring under foreign laws, including the UK, according to a person with knowledge of the matter, who asked not to be identified as the talks are private.
Those measures require a lower threshold to make the deal binding for creditors.
The current proposal failed after a group of investors that own 34% of Adler’s 2029 notes had argued the proposed restructuring was inequitable and favored the holders of the landlord’s nearer term securities.
The measures would have seen creditors provide a new €937.5 million ($998 million) loan to the company to pay back maturing bonds and waiving the need for audited accounts until later next year. They would also have been able to take 25% of the company’s equity.
Adler has been under pressure since a report published by short seller Viceroy Research accused the company of fraud. It hired KPMG to conduct a forensic audit of those claims, as well as allegations sent to its lenders by a former associate of tycoon Cevdet Caner, whose family owns a stake in the company.
The audit cleared the company of systemic fraud but was unable to refute all of the allegations. KPMG subsequently quit as auditor, heaping further pressure on the landlord, which has yet to find a replacement.
With debt maturities looming, and capital markets effectively closed to the company, the landlord has been attempting to sell off swathes of its portfolio.
It booked a series of deals earlier this year to help repay short-term debt, but rising interest rates have since hit demand in the German property market, making it harder for the company to dispose of properties at book value.
The proposed capital injection was backed by some of Adler’s biggest creditors including BlackRock Inc., Pacific Investment Management Co. and Sculptor Capital Management Inc.
(Updates with restructuring plans from fourth paragraph.)
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