UPDATE 1-German property company IVG says may need funds from October

Fri Jul 12, 2013 4:09pm EDT

Related Topics

* Company says needs funds of up to 120 mln euros

* Company says in talks on bridge financing

* Company says to revalue and sell certain assets, cut jobs (Adds details on restructuring, CEO comment)

FRANKFURT, July 12 (Reuters) - German property company IVG Immobilien said on Friday a preliminary liquidity analysis had shown that it may need funds of up to 120 million euros (US$156.6 million) from October or the company's future could be in doubt.

"An expected liquidity need of approximately 120 million euros, not yet met and possibly posing a risk to the company as a going concern, might arise between October 2013 and March 2014," the company said in a statement.

The company said it was currently in talks related to a bridge loan.

IVG, which has almost 4 billion euros in debt, said some of the money needed was because of restructuring costs.

IVG built up debt during an expansion spree but some costly projects then declined in value. It has said it needs to cut its liabilities by up to 1.75 billion euros and completely restructure its debt to make sure it has enough capital to refinance loans maturing this year and in 2014.

The company, which manages assets worth 21 billion euros including a stake in London's landmark Gherkin office building, previously warned that it had come close to breaching covenants on its syndicated loans, which would mean banks could demand early repayment.

On Friday, it said that talks with creditors were ongoing and that it was working on a joint plan that would satisfy creditors and shareholders.

IVG said should it be forced to liquidate its assets, an Entity Priority Model (EPM) analysis conducted by an audit firm showed that creditors of a hybrid bond and shareholders would leave empty handed.

"The EPM shows that only an agreement by all parties on a joint concept would result in the most value for all stakeholders," Chief Executive Wolfgang Schaefers said in a statement.

Two sources familiar with the matter told Reuters that IVG had a week to get all sides in agreement over the refinancing so that it could hold its annual general meeting in accordance with German regulations.

In May, the company was reported to be considering a debt-for-equity swap that would be costly for shareholders and junior debt holders.

IVG also set out a business plan that would entail property and infrastructure sales and revaluations, as well as an expansion of its funds business, job cuts and cost savings of around 25 million euros a year until 2018.

IVG reported a 100 million euro net loss last year and skipped paying a dividend. It also deferred coupon payments on a hybrid bond.

It said on Friday that the restructuring plan should result in annual earnings before interest and tax of well over 200 million euros. ($1 = 0.7661 euros) (Reporting by Victoria Bryan; Additional reporting by Alexander Huebner and Kathrin Jones; Editing by Toni Reinhold)

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