German real estate investment company, IVG Immobilien is in the process of restructuring about Eur3 billion or US$3.9 billion of its debt. To pay for such debts, it announced plans to issue shares which caused its share prices to tumble by as much as 25%.
IVG's share values fell by US$0.30 per share. which cut its enterprise valuation to just Eur65 million. The company, which is based out of Bonn, Germany is planning to swap new shars for existing loans and outstanding bonds in order to reduce its liabilities to Eur1.75 billion. This is the content of the announcement they made last May 31 after close of the trading markets.
IVG was once the largest commercial real estate firm in Germany. During the property crisis of 2008, it had lost 97% of its market value after property values were written down causing it great difficulties in its repayment of its debts. Overall, the company and its related funds were valued at Eur21 billion, which includes a 50% stake in the iconic Gherkin Tower in London.
Also included in the statement was the postponement of its annual shareholder's meeting from August 14 to August 30. It is in this meeting that a restructuring program would be presented to the company's shareholders for their approval.
According to its annual report, the company has Eur3.2 billion worth of debt due for 2014. The proceeds of these debts would be used to fund operations and property acquisitions. Starting May 31, it would commence restructuring discussions with its creditors.
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