Uncertainty follows vote to oust BCMS as loan servicer in favour of CBRE
Mike Phillips and Jane Roberts
The proposed restructure of a £1bn loan to Glenn Maud’s Propinvest was held up this week after investors in the company’s debt voted to oust a key adviser.
The restructure of this loan, provided by Barclays in 2006, would have cleared up the final element of Project Sparkle, a plan to refinance £1.75bn of Propinvest’s £3.5bn portfolio via the corporate bond market.
It is understood that Sparkle has been scrapped because of the moribund financial markets.
Loan extension agreements have been reached with individual lenders on another £750m of loans.
Last Friday (20 February) Barclays Capital Mortgage Servicing – acting as servicer of the Barclays loan – put forward an alternative proposal to restructure the £918m of senior debt and £105m junior loan.
This was agreed to by Propinvest, junior lender Barclays and the provider of hedging to the loan, although, as per the securitisation’s legal documentation, it was not put to junior or senior bondholders.
However, on Wednesday this week, the junior bondholders on the £918m senior loan voted to replace BCMS with CB Richard Ellis, leaving the restructuring unresolved.
The BCMS proposal was designed to maximise income from the portfolio and avoid crystallising losses through a fire sale. It included a waiver of LTV breaches, removal of covenants for at least three years and the retention of Propinvest as asset manager, under supervision by Jones Lang LaSalle.
The BCMS restructure plan will now be considered by CBRE, which is expected to consult the bondholders.
The proposal to appoint CBRE was put forward by former Eurohypo duo Paul Rivlin and Neil Lawson-May, who advise the owners of some of the junior bonds through a vehicle managed by their Palatium Investment Management.
A spokesman for Palatium said: “We believe this is the right solution for the senior loan noteholders. It is as good a solution as we are going to get and now we have to move forward.”
The value of the 35-property portfolio against which the loans are secured dropped from £959m to £801m in September last year, breaching loan-to-value covenants.
BCMS said that it would now be inappropriate for it to implement its proposal. “BCMS would expect the replacement special servicer would wish to form its own view on the merits of any restructuring,” it said.
