* IVG creditors in last-ditch talks to avoid insolvency
* Senior lenders demand 88 percent of shares in
* Junior lenders see asset sales as way to plug holes
* Only days left to strike deal before insolvency
By Tom Bill and Arno Schuetze
LONDON/FRANKFURT, Aug 1 Apollo and TPG
Capital are among buyout funds holding the debt of IVG
with the aim of taking control of the Germany property
group as last-ditch talks with creditors near an end, three
sources close to the situation told Reuters.
The company, which runs a fund that co-owns the Gherkin
skyscraper in London, said earlier this week it had failed to
agree a restructuring of 4.2 billion euros ($5.6 billion) of
debt, sending its shares 42 percent lower.
IVG built up debts during an expansion spree but some costly
projects have since declined in value.
Chief Executive Wolfgang Schaefers has said he would seek
creditor protection to buy breathing room if no deal was
possible. After the expiry of a July 30 deadline, IVG now has
only a few days left to strike a revamped deal before court
insolvency proceedings begin.
If a way to a restructuring is not found, a sell-off of all
or parts of the company could begin.
Private equity funds like Apollo and TPG have been buying
IVG's debt to gain a negotiating position in talks over its
future that could allow them to take control via a
debt-for-equity swap, sources familiar with the matter said.
But no single company has amassed a large enough stake to
take control on its own, three sources told Reuters. And the
large number of creditors, which one source said was about 250,
complicates the task of getting a deal done.
Apollo was not immediately available for comment and TPG and
IVG both declined to comment.
Debtholders would normally need about 75 percent to push
through such a takeover. But the picture at IVG is made even
more complicated by the fact there are four separate packages of
debt with differing amounts of collateral and negotiating power
attached, plus the interest of shareholders.
"Time is running out and although a deal is still possible,
I do not see everyone pulling in the same direction," a person
familiar with the negotiations said.
About 70 to 75 percent of 2.2 billion euros of syndicated
loans are held by various funds after several banks sold out,
according to people familiar with the matter. IVG also has a 400
million euro hybrid bond and a convertible bond for the same
amount held almost 100 percent by funds, the sources said.
The holders of a 1.3 billion euros syndicated loan from 2007
- dubbed Syn Loan I - have proposed swapping their complete
holdings for 88 percent of the equity, a source familiar with
the negotiations said.
Under this proposal, holders of the convertible bonds would
receive 12 percent of the equity, while current shareholders as
well as holders of hybrid bonds would be wiped out completely or
be left with a combined stake of up to 5 percent.
Holders of another loan - Syn Loan II - would see no debt
swapped for equity but have the debt maturity extended.
"The holders of the Syn Loan I are the only creditor group
which has also offered new money," a person familiar with the
proposal said, adding the creditor group was willing to supply
the 120 million euros that IVG has said it needs immediately to
Other creditor groups, however, feel they would be
outsmarted in a such deal.
"There is no need to rush things," a person familiar with
the junior lenders' position said. Germany's property market was
in good shape and some of IVG's assets - which have a market
value of roughly 5 billion euros - could likely be sold without
large discounts to plug financing needs, the person said.
He said IVG's projection that it could recover only 3.1
billion euros in case of an insolvency was too conservative.
IVG 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
Its share price has plummeted 92 percent this year against
the backdrop of the restructuring talks.