EUROPE - Class A noteholders in zombie CMBS Opera Uni-Invest have rejected a proposal that would have paid off subordinated debt, opting instead for a deal that will give class A noteholders 40% (€143.5m) of their cash back immediately.
Private equity firms TPG/Patron, which will now take over the CMBS, won the vote with a proposal that will wipe out subordinated classes and sell the defaulted senior loan to Utrecht Holdings, owned by the partners.
As a result of this week's decision, junior noteholders - who backed a rival consensual restructuring proposal from Valad - will not recoup the €242.9m owed them.
Valad's proposal would involve taking over the assets as a third-party manager to implement an accelerated disposal plan, and extending the maturity date on all classes for four years.
The firm had claimed its management fee would come in at €5.6m less than its competitor's over four years.
Each proposal required 75% of class A noteholders to vote for it.
The CMBS's underlying portfolio comprises more than 200 mainly office secondary and tertiary assets, which Valad believes TPG and Patron have significantly overvalued.
Valad Europe chief executive Marty McCarthy said: "Consensual restructuring of future CMBS defaults offers a credible alternative to investors who wish to retain control post-restructuring, while allowing the value of their underlying asset collateral to be maximised and disposed of in an orderly manner."
Given forecasts for more defaults over the next few years as a swathe of CMBS reach maturity, the outcome of the Uni-Invest vote had been mooted as an indicator of future votes.
But Krishna Prasad, head of mortgage-backed securities strategy at RBS, said: "I wouldn't say it was a trend. Every transaction is different, and investors will always try to find a solution that works for them."
Asked if class A noteholders had made the right decision, he added: "What does 'right decision' mean? There is no moral imperative.
"Noteholders vote for what they consider to be economically appropriate to their own interests. In this case, it was right for those who wanted their cash back quite soon."