Germany's IVG seeks creditor protection

IVG Immobilien has filed for court protection after failing to reach an agreement with creditors over the restructuring of its €3 bn debt pile.

In a statement on Tuesday, IVG said the application to open shield proceedings was 'unavoidable' but added that it will not affect the running of the operating business.

IVG Immobilien will continue talks with creditors – now under protective shield proceedings – in order to reorganize its debt, the Bonn-based company said.

'Despite weeks of intensive mediations and negotiations efforts, the individual creditor groups were unfortunately unable to agree on a consensual solution taking into account all stakeholder interests,' said CEO Wolfgang Schäfers.

'This is all the more regrettable because key shareholders of the company have signalled their support to the restructuring plan presented by creditor representatives,' Schäfers added.

The proceedings will protect the company from claims for up to three months while it tries to reach an agreement, which will now only require a three-quarters majority by its debtors. If no agreement is reached, the court will be allowed to appoint an insolvency administrator to dispose of company assets and distribute the proceeds to creditors.

IVG, once Germany’s biggest publicly held property company, saw its share value close at 8 cents on Tuesday, giving the company a market value of €16.6 mln.

The company has been in negotiations with holders of its syndicated loans, a hybrid loan and a convertible bond since early June. In mid August, its shareholders submitted a debt-for-equity swap for €2.1 bn of the overall debt burden of more than €3 bn. However, IVG's five creditor groups failed to approve the proposal by the deadline of August 20, triggering the court filing.

IVG has €21 bn of assets under management, including €4 bn of property on its balance sheet and almost €12 bn held in its institutional real estate fund business.