German residential company Deutsche Annington has proposed a refinancing of Europe’s largest securitisation – the €4.46bn Grand CMBS.
The company, which owns more than 150,000 homes and is controlled by Guy Hands’ Terra Firma private equity group, has proposed €504m of “equity support” in exchange for a five-year extension. This includes a €265m cash injection from Terra Firma.
The proposal will reduce the outstanding securitised debt to €3.8bn and the LTV to 60% from 72%, based on an updated valuation of €8.4bn in January 2012.
Deutsche Annington hopes to pay down all the debt over the next five years, with €1.2bn to be repaid in the first year, €700m in the second year, €650m in the third and fourth years and €560m in the final year.
In return for the loan extension, the interest rate paid to bondholders will rise from 48 basis points to 165 basis points.
The proposal has been agreed by 37% of the investors who bought bonds secured by Deutsche Annington’s debt, and a wider bondholder vote will now be undertaken.
The key to the success of the proposal is winning the support of junior noteholders.
Bondholders will vote on the proposal at a court hearing to be held on 5 October. By value, 75% of them must agree, as well as a majority by number.
Without objections, the proposed refinancing could be approved at a hearing scheduled for 9 November.
bridget.oconnell@estatesgazette.com
