Jan 31, 2023
Adler Bondholder Group Proposes Alternative Restructuring Plan
(Bloomberg) -- A group of investors that own Adler Group SA’s longest dated bonds have published an alternative plan to deal with the landlord’s debt in a bid to head off the company’s attempts to pursue an English restructuring.
The group, represented by Akin Gump, Gleiss Lutz and FTI Consulting, argue their plan would avoid “the risks and uncertainty” of the landlord’s current proposal. They voted against Adler’s plan late last year amid concerns it favored holders of the company’s shorter term debt.
Adler Attempts to Overhaul Debt Through UK Courts
Adler is seeking to repay around €6.3 billion ($6.8 billion) of debt just as Germany’s once booming real estate market endures a correction, while battling against a short-seller report published in October 2021 which claimed the company is a “hotbed” of fraud. Management denied the allegations and a forensic audit of the company cleared it of systemic fraud but was unable to disprove all of the claims.
The company failed to win enough support from creditors to overhaul bond terms under German law in December. It’s now preparing to implement a restructuring plan in the UK.
The bondholder group represented by Akin Gump, which holds 34% of the €800 million of bonds due 2029, “continues to wish to engage in constructive discussions with the issuer and holders of its other notes,” it said in a statement emailed on Tuesday.
Under the bondholder counterproposal, a new loan provided by creditors to buy time for Adler to sell assets would mature in July 2025. It would rank senior to all of the company’s bonds, which would come due a year later.
The group also proposes an option to tender Adler notes at 60 cents on the euro using proceeds from disposals, offered first on the company’s 2024 notes. Any excess would then be offered to the remaining notes in order of maturity.
The 2029 bonds gained more than 1 cent on the euro on Tuesday and are indicated at 38.4 cents, the highest level since November, according to data compiled by Bloomberg.
(Adds CDS pricing in final paragraph, an earlier version of the story corrected a detail in table regarding debt seniority)
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