IVG shareholders propose debt-for-equity rescue

Shareholders of embattled German listed property giant IVG Immobilien have submitted a debt-for-equity proposal that will wipe out half of the company's share capital.

A group of shareholders are attempting to stave off a court-appointed restructuring process and to keep the company operating as a going concern. The proposal involves a debt-for-equity swap for €2.1 bn of the overall debt burden of more than €3 bn.

Last month CEO Wolfgang Schaefers warned that the company would instigate an official procedure to seek court protection from creditors after restructuring talks with shareholders collapsed.

Late on Saturday, IVG revealed shareholders had submitted key elements of a new comprehensive restructuring plan, which shareholders and holders of its hybrid bonds must vote on.

Under the proposal, creditors of the €1.3 bn SynLoan I syndicated loan dating from 2007 would receive shares amounting to 80% of the company's share capital in a debt-for-equity swap. These creditors would in turn provide a €140 mln bridging facility to allow the company to continue operating until the completion of the restructuring.

Creditors of a €400 mln convertible bond would receive about 20% of IVG's shares, and waive rights to force a redemption of the bonds by March next year.

The proposal also envisages a capital increase with subscription rights for IVG’s present shareholders to raise an unspecified amount of equity to help compensate shareholders and bond holders.

Additionally, the prospect of a postponement of the due-date of payment claims under the €1000 mln LBBW loan was offered.

IVG's management further announced in a statement that that the strategic review of all business divisions had resulted in a need for book value depreciations of €350 mln in regard to the company's 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.'

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.

The company said it hoped to publish its half-year report to end-June 2013, postponed from 19 July, on 26 August.