Prelios completes debt restructuring with convertible bond

MILAN Mon Aug 26, 2013 11:59am EDT

MILAN Aug 26 (Reuters) - Italian property firm Prelios issued on Monday a 233.5 million euro ($312.3 million) convertible bond, the last step in a recapitalisation that has turned tyremaker Pirelli and the country's two largest banks into leading shareholders.

Prelios, hit by writedowns in a recession-hit home market, approved a turnaround plan in May to restructure 561 million euros in debt that included the bond as well as two capital increases worth a total of 185 million euros.

Prelios shares closed up 2.76 percent on Monday, outperforming a 1.97 percent drop in Italy's all-share index .

Prelios' creditors, including Pirelli, UniCredit and Intesa Sanpaolo, are buying the bond by swapping debt owed to them by the real-estate company with notes that convert automatically into Prelios shares. The bond matures in December 2019 but can be extended to 2022.

The tyremaker and Italy's top two banks had previously taken up most of 70 million euros worth of shares left unsubscribed in a 115 million euro capital increase, also by converting Prelios' debt into equity.

As part of the restructuring, Prelios creditors teamed up with Italian businessman Massimo Caputi to buy 70 million euros worth of non-voting Prelios shares in a separate capital increase reserved for their vehicle, called Fenice.

As a result of the complex restructuring deal which will cut Prelios' debt to 250 million euros, Fenice will hold nearly 30 percent of Prelios, a source close to the matter said.

Official data will be available next month.

Pirelli is expected to hold a direct 9.2 percent stake in the real estate firm, UniCredit is seen holding 7.5 percent and Intesa Sanpaolo 3.9 percent, the source said.

Under its turnaround plan, Prelios will look to sell its real estate assets over the next two years and focus on boosting revenue from property under management worth 9.7 billion euros as of 2012.

At the end of last year Prelios had minority stakes valued at 2.1 billion euros in the real estate portfolios, whose net debt stood at 5.6 billion euros.

The loss-making company, which manages property in Italy and Germany, expects to return to an operating profit next year, Chief Executive Sergio Iasi said in June.

Iasi said in May the company would not be a forced seller of real estate because the debt restructuring provided two to three years to carry out the sales.

($1 = 0.7477 euros) (Reporting by Valentina Za; Editing by Mark Potter)

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