FINANCE: IVG Immobilien’s insolvency plan has taken effect after the Bonn Regional Court rejected legal action by investors.
A statement from the listed German property investor said that the court had rejected complaints filed against the plan, which will reduce the company’s debt by around €2.2bn.
Subordinate investors in the group’s fund and DSW, the German association for private investors, claimed that the insolvency plan ignored the huge ownership of existing IVG shareholders and unlawfully denied them the opportunity to participate in the restructured company.
As well as rejecting the complains, the court has denied further appeal against this decision.
IVG said this means that it “has cleared the decisive hurdle in the battle for the continued existence of one of Europe’s largest real estate companies”, which will now be taken private.
The insolvency plan proposed by the IVG management board includes a debt-for-equity swap and a group restructuring to reduce its €3.2bn of debt.
Creditors of a syndicated €1.35bn loan and a €100m loan from LBBW will take control of 80% of the company and the holders of a €400m convertible bond will take control of the remaining 20%.
The creditors include a consortium led by Cerberus Capital Management, Marathon Asset Management, Värde Partners and Aurelieus Capital Management.
“The lengthy and intensive negotiations with our capital providers have paid off,” said IVG board member Hans-Joachim Ziems, who was responsible for the restructuring.
The company expects the execution of the plan and the closing of the 11-month insolvency proceedings in the current quarter.
Employees will be reduced from 400 to 320 as part of the company segregating the centralised functions for its different divisions and creating autonomous business areas for its on-balance sheet real estate business, retail and institutional fund management businesses and caverns business.
Ralf Jung, the designated chief executive of the newly formed IVG group, who has been working for the business as a consultant since the start of July, will take over after the insolvency proceedings are closed.
bridget.oconnell@estatesgazette.com
