* IVG submits insolvency plan to Bonn court
* Creditors of two loans and a bond to get 100 pct ownership
* Hybrid bondholder, equity investors to get nothing
* Shares down 62 percent
FRANKFURT, Feb 24 Germany's IVG Immobilien
, the co-owner of London's landmark "Gherkin" tower
brought low by debts and cost over-runs, has proposed a
debt-for-equity swap that will put the real estate firm in the
hands of its creditors.
IVG, which owns the Gherkin tower with Evans Randall Ltd,
sought protection from creditors in August after failing to
reach an agreement over the restructuring of its debt and on
Monday filed an insolvency plan to a court in Bonn, Germany.
One of Germany's best known real estate firms, IVG amassed
over 4 billion euros ($5.5 billion) in debt during a rapid
expansion when it financed a business and hotel complex located
at Frankfurt airport called "The Squaire" that suffered from
It was also hit by a growing unwillingness among European
banks to provide new loans, a consequence of a continent-wide
credit crunch, and new regulations forcing lenders to cut their
exposure to property.
Under its proposal which must be approved by the court, IVG
will reduce its capital to nil and then issue new shares that
some of its creditors can take up in exchange for outstanding
debt. That way, the creditors will get back at least 60 percent
of their investment, while equity investors will lose their
Following the debt-for-equity swap, IVG will be split into
three separate businesses overseeing its real estate operations,
its institutional funds unit and its gas storage business.
"Management is convinced that it has worked out a concept
that enables a complete reorganisation of IVG and creates a
sustainable structure," IVG Chief Executive Wolfgang Schaefers
said in a statement.
Under the plan, the creditors of a syndicated loan totalling
1.35 billion euros and a 100-million-euro loan originally
extended by LBBW will end up with 80 percent of IVG's stock, and
holders of a 400-million-euro convertible bond will
have the remaining 20 percent.
Another syndicated loan worth 1.05 billion euros will be
deferred, and the owners of a 400-million-euro hybrid bond
will waive their financial claims.
IVG's stock, which has lost 97 percent of its value over the
past year, will be delisted as a result of the capital
reduction. It was down by 62 percent at 0.03 euros by 1252 GMT.