EUR 45m junior loan to a privately held 370,000 m2 Swedish residential real estate portfolio
Starting point in 2008:
Danish parent of Borrower goes bankrupt
Senior loan defaulted
Asset portfolio of 4,000 residential flats located across 10 cities is grossly under invested
Investors interested in acquiring portfolio at senior debt level
Implied value to junior loan is zero considering portfolio market value at the time
The situation we were faced with:
Senior lender was itself distressed and responsibility/decisions moved between teams and countries
Significant delays in decisions by Senior Lender who fails to understand the big picture and the benefits of a joint workout approach
Due to prevailing market conditions, Investor universe at the time of default (2008-2009) was limited
Significant CAPEX backlog, but fundamentally a stable residential asset portfolio
Borrower’s local management team showed signs of fatigue after difficult times leading up to bankruptcy of its parent company
Where Reviva added value:
Created a workout strategy and business plan after having examined most of the portfolio assets
Presented a strategy for joint workout approach to the senior lender, finally securing a memorandum of understanding to support such approach (a two year effort)
Fought off numerous attempts at cutting off the junior loan (investors seeking pre-pack solutions with the senior lender) and reversed one attempt at corporate hijacking
Built trust with senior lender resulting in a new loan agreement supporting Reviva’s strategy of taking control of the borrower
Secured ownership of the borrower after long negotiations with the bankruptcy estate
Negotiated and settled DKK 1bn corporate cross-guarantee issued by the borrower towards a 3rd party creditor, in order to clean up the structure and facilitate a viable exit strategy
Built trust and relationship with the borrower’s management organization securing their commitment throughout the workout period
Worked alongside borrower’s management to implement business plan and carefully focused CAPEX program
Secured and negotiated a sale to an investor allowing for full repayment of all outstanding debt obligations to both senior and junior lenders
Outcome:
Sold business to a listed Swedish real estate company in 2013
Transformed a zero recovery loan junior to full recovery