FRANKFURT May 7 German property company IVG Immobilien is considering swapping part of its debt for equity in a move to restructure its liabilities piled up in a daring expansion spree, four people familiar with the situation said.
IVG had outstanding debt of almost 4 billion euros ($5.3 billion) at the end of 2012, and the company said in March that it needs to completely restructure its debt to make sure it has enough capital to refinance loans maturing this year and next.
One option would see holders of some syndicated loans being offered new equity, while existing shareholders would be wiped out almost completely, the people said.
Under the plan, IVG would also seek to reduce debt by about 800 million euros by almost entirely cancelling 400 million euros each in convertible bonds and hybrid bonds, they said.
One of the sources said that according to the plan, which IVG will likely present next month, holders of those securities would be offered a very small equity stake. Another source said that they may receive warrants, which would benefit them in any future recovery at IVG.
The first source said at least 600 million euros in syndicated loans were likely to be swapped for equity, while the other three people said that it was too early to say how much of IVG's outstanding loans would be swapped for equity.
IVG declined to comment.