Troubled Central European property developer Orco is offering its bondholders a debt-for-equity swap as part of its restructuring plan. The company, which was granted protection from its creditors by a Paris court last March, is proposing that the creditors exchange their bonds worth EUR 411 mln for a mix of new bonds due in 2017 and bonds that may be converted at a later date into shares.
Troubled Central European property developer Orco is offering its bondholders a debt-for-equity swap as part of its restructuring plan. The company, which was granted protection from its creditors by a Paris court last March, is proposing that the creditors exchange their bonds worth EUR 411 mln for a mix of new bonds due in 2017 and bonds that may be converted at a later date into shares.
'Bondholders would become shareholders and would benefit from potential profit from the recovery of Orco's business', Orco said. Altogether, the bondholders would recover roughly 56% of their investment, it added. As part of the restructuring, the Paris-based builder also plans to issue 11.43 million new shares.
Orco, which posted a loss of almost EUR 200 mln in the first half of 2009, said that the restructuring is aimed at cutting its loan-to-value to around 50 % by 2012.
Approval of the debt restructuring plan is a condition for the new equity investor, US-based Colony Capital, to go ahead with a EUR 80 mln equity injection into the firm. Voting on the draft plan will take place on September 24. In order to take effect, the plan must be approved by a two-third majority of bondholders as well as by the Paris court.
