IVG Immobilien AG: Key elements of a restructuring concept

In the negotiations conducted by IVG Immobilien AG and the representatives of principal creditors affiliated in 'Ad hoc-Committees' with regard to (i) a loan agreement in the amount of €1,350 million dated 25 September 2007/13 April 2012 (SynLoan I), (ii) a loan agreement in the amount of €1,047.4 million dated 12 May 2009/24 February 2012 (SynLoan II), (iii) the bilateral loan agreement in the amount of €100 million dated 30 November 2007/13 April 2013 (LBBW Loan) and (iv) the convertible bond (ISIN: DE000A0LNA87), the creditors have submitted key elements of a comprehensive restructuring concept: By way of a simplified capital reduction to cover losses, the existing stated share capital shall be, in a ratio of 200 to 1, reduced to 0,5% of the present stated share capital. Further, it is, inter alia, envisaged that SynLoan I, LBBW loan and the convertible bond will be transferred to the company by way of a contribution in kind with 100% of their respective face amounts (so-called debt-to-equity swap), which would lead to a quota-ratio of these three creditor groups’ share in the stated share capital of 80% (SynLoan I / LBBW loan) to 20% (convertible bond). Furthermore, the restructuring concept envisages a capital increase for cash with subscription rights for IVG’s present shareholders and – as a compensation for their waiver of claims – for the holders of the hybrid bond (ISIN: DE000A0JQMH5), or an economically similar alternative structure, which allows the present shareholders and the hybrid bond holders, additionally and in a quota-ratio between them yet to be defined, to acquire 3% of the stated share capital post contribution in kind and capital increase for cash.

Moreover, creditors of SynLoan I have, on term sheet level, agreed with the Company on a bridge financing, amounting to approx. €140 million, to cover the additional liquidity need. The bridge financing would presumably safeguard the continuance of the Company until the envisaged closing of the restructuring. Additionally, the prospect of a postponement of the due-date of payment claims under the LBBW loan was offered. Also, the representatives of the convertible bond creditors offer the prospect of support for a postponement of the termination right as of 29 March 2014 (so-called Put Option), if this should become necessary in the course of the implementation of the restructuring concept.

The Company will shortly assess these results, conduct further negotiations on this basis and, in case of an overall agreement on a detailed level, invite to the Company’s annual general meeting of shareholders and to an assembly meeting of the creditors of the hybrid bond, to submit the comprehensive restructuring concept to the vote of the shareholders and the creditors of the hybrid bond.

Further, the management board hereby gives notice that the strategic review of all business divisions and their asset valuations as per 30 June 2013 – as announced in the ad hoc publications dated 12 and 19 July 2013 – resulted in a need for book value depreciations in an overall amount of approx. €350 million (German GAAP), this amount being based on depreciations in various divisions, particularly including value adjustments regarding real estate, caverns business, shareholdings and receivables.

Accordingly, the management board hereby announces that more than half of the Company’s share capital is lost (para. 92 sec. 1 German stock corporations act).

The half-year report as per 30 June 2013 (as both IVG group’s consolidated and IVG’s individual financial statement) will – as announced in the ad hoc publication dated 19 July 2013 – presumably be published on 26 August 2013.

Source: IVG

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