London's 'Gherkin' owner IVG seeks protection from creditors

FRANKFURT Tue Aug 20, 2013 1:49pm EDT

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FRANKFURT (Reuters) - Germany's IVG Immobilien IVGG.DE, co-owner of the landmark 'Gherkin' building in London's City financial district, said on Tuesday it was seeking protection from creditors after failing to reach an agreement over the restructuring of its debt.

IVG has about 4 billion euros ($5.3 billion) of debt after a rapid expansion spree and had sought for weeks to agree with creditors on swapping some of the debt for equity.

Earlier this month it struck a preliminary deal but it said on Tuesday it had not been completed.

The filing for protection from creditors, made with a court in Bonn, makes use of a German law that gives companies up to three months of breathing space to try to fix their finances.

"The filing became unavoidable in the end. The positions with regard to a number of separate issues were too far apart," Chief Executive Wolfgang Schaefers told reporters in a conference call.

A deadline for creditors to come to terms expired on Tuesday, which triggered the filing.

Shares in IVG, which have lost 96 percent of their value this year, closed down 4.8 percent at 0.08 euros on Tuesday.

IVG has said it needs to cut its liabilities by up to 1.75 billion euros and completely restructure its debt to give it capital to refinance loans maturing this year and in 2014.

The preliminary plan would have seen the company reduce its capital, with creditors on a 1.35 billion-euro loan relinquishing their claims in exchange for shares.

Schaefers said talks with creditors would continue following the court filing and he was confident that a deal could be struck.

Under the creditor protection proceedings each of the five groups of IVG's debtors, split up depending on the seniority of their claims, will now have to approve any new deal with only a three-quarters majority.

(Additional reporting by Alexander Huebner and Ludwig Burger; Editing by Maria Sheahan and Greg Mahlich)

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