Key creditor questions IVG’s recovery estimates

IVG Immobilien's creditor Aurelius Capital Management said on Wednesday that is disagrees with the company's recovery estimates regarding the syndicated loans and the convertible bonds.

The New York-based hedge fund, which owns roughly 30% of the convertible bonds issued by IVG, said the model presented by the company is based on ‘erroneous assumptions that inflate the recovery for the so-called Syn Loan I and understate the recovery for the Convertible Bonds’.

IVG announced in early July that it may have a liquidity shortfall of up to €120 mln and presented an analysis calculating the recovery ranges of creditor groups in various liquidation scenarios.

Aurelius believes the correct recovery range for the different creditor classes of the Syn Loan I is 39% to 52%, versus an estimated provided by IVG of 46% to 55%. To the contrary, the recoveries from the convertible bonds should be estimated at a higher range of 45% to 73%, compared to an estimated of 27% to 41% distributed by IVG.

‘Aurelius has consistently urged the IVG companies to provide as much publicly available transparency as practical,’ the creditor added in a statement.

IVG Immobilien said earlier this week that its main creditors had agreed to submit a proposal of a 'sustainable' refinancing plan by the end of the month which would be put to the vote at the company's Annual General Meeting of shareholders. These creditor groups would also be willing to provide provisional financing of up to €120 mln to safeguard the company's immediate future, the indebted developer said.

In view of the short timeframe for negotiations, Germany's largest listed real estate investor also postponed its Annual General Meeting by another two weeks to 12 September 2013 and said its half-year report will now be released on August 26, instead of August 9.

IVG Immobilien has almost €4 bn in debt.