LONDON May 8 Spanish property company
Metrovacesa has until May 12 to get the necessary lender support
it needs to push through a financial restructuring of 1.87
billion euros ($2.60 billion)of its debt using a scheme of
arrangement, according to banking sources.
The company needs to get 75 percent of lenders to agree to
its proposed restructuring deal before it can use a court
approved scheme to push the deal through.
So far the proposal, which will involve a partial write off
and repayment of the borrower's Term Loan A, has received
support from 40 percent of lenders, which are predominately
hedge funds, one of the bankers said.
Under the terms of the deal, 8.5 percent of the debt will be
written off in return for an early repayment of at least 80
percent of the outstanding amount of the debt.
The remaining 11.5 percent of the debt, or stub debt, will
be converted into a payment in kind (PIK) instrument maturing on
June 30 2017, paying interest of 550 basis points over Euribor.
Lenders agreeing to sign up to the deal will receive a 1
percent consent fee.
Metrovacesa has been struggling with its debt pile since it
acquired French rival Gecina in 2005, which left it
saddled with a 3.2 billion euro syndicated loan involving over
30 Spanish and international banks.
The plans to reduce Metrovacesa's debt involves the sale of
its remaining circa 26.8 percent stake in Gecina, which is
ongoing, using the proceeds to repay the debt.
If the company raises more than expected through the sale of
its Gecina shares, in excess of amount needed to repay 80
percent of the Term Loan A, the additional cash must be used
immediately, using a call option, to buy back the stub equity at
90 percent of face value.
A 616 million euro Term Loan B will remain untouched.
Hedge funds bought into Metrovacesa's debt following a debt
for equity swap which saw the business fall into the hands of
its banks in February 2009.
Metrovacesa's owners at the time, the Sanahuja family,
agreed to swap a 55 percent stake in exchange for the banks
cancelling 2.17 billion euros of the family's debt after the
financial crisis hit and property values took a nosedive.
In April 2011 Metrovacesa then went to the High Court in
London to get approval for a scheme of arrangement to push
through a refinancing of the 2006 3.2 billion syndicated loan as
part of a wider restructuring of its debt, which included a 1.95
billion euros rights issue.
The 3.2 billion euro loan refinanced a larger 2005 loan that
funded the acquisition of Gecina.
Metrovacesa declined to comment.
($1 = 0.7183 Euros)
(Editing By Christopher Mangham)