Cairn Capital has been appointed to advise on the proposed €4.46bn Grand refinancing – Europe’s largest securitisation.
The London-based debt specialist will take on the role of financial adviser, working with noteholders in connection with Deutsche Annington’s proposed restructuring of the debt securing its €8.4bn German multifamily portfolio.
Deutsche Annington, which owns more than 150,000 homes, is controlled by Guy Hands’ Terra Firma private equity group.
A statement released to the London Stock Exchange said: “The principal purpose of the engagement of Cairn Capital by the issuer is to assist it in evaluating the final terms of the proposed refinancing, once agreed by the relevant parties, in order to be satisfied that the requirements for such a scheme of arrangement are met.”
Last week Deutsche Annington proposed €504m of “equity support” in exchange for a five-year extension. This includes a €265m cash injection by 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
