MGPA offers EUR 56m lifeline for Plantation Place

MGPA, a private equity real estate fund backed by Macquarie Group, has offered an emergency injection of EUR 56.7 mln (£45 mln) for the vehicle that owns Plantation Place, a City of London office complex. The vehicle, which is owned by Stobart, Tishman International and Invista Foundation Property Trust faces the prospect of defaulting on the loan used to buy the building for £527m in 2006, according to a report in the Financial Times on Friday.

A £435m loan that has been securitised against the 51,096-m² City building whose owners have declined to inject more equity. The deal is contingent on the loan-to-value covenant being removed from the debt structure. It aims to pay back some of the existing debt and improve cash flow in the deal. Debt consultancy firm Houlihan Lokey is advising on restructuring the debt.

However, the offer is conditional on agreement from creditors, some of whom do no necessarily want to see fresh equity introduced. Some bought the debt at less than face value, and would profit if a sale of the building were forced, as they would be repaid at the full value of the debt. A group of bondholders, lead by Fidelity International, is seeking to gain ‘negative control’ of the property by blocking the proposal for new equity, which they feel would eventually lead to a sale.

The report added that both the building’s owners and the debt investors believe they have a watertight legal position that means they can decide on whether the equity raising goes ahead. Legal complexities relating to the bonds, however, may result in the matter being decided by arbitration or legal proceedings.