UK race to the bottom spreads to credit safeguards

Adler SA

19/05/2023 11:21

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Neil Unmack
       LONDON, May 19 (Reuters Breakingviews) - Germany
property group Adler has managed to push a restructuring through
London courts that violates normal principles
of debtholder fairness. That might encourage other companies
to follow suit. But as with watering down equity listing
standards, it carries a cost.    
    Full view will be published shortly.
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    CONTEXT NEWS
    Adler Group’s 2029 bonds were trading at 33.6% of par value,
as of May 17. The notes were part of a restructuring, which saw
their claim on the company’s assets weakened, and some earlier
creditors’ claims enhanced.  
    A UK court on April 12 approved Adler’s restructuring plan,
despite its failure to win 75% approval by holders of the 2029
bonds. The so-called “cram down” means the judgement is binding
on all creditors, affecting some 6.1 billion euros of debt.  
    The restructuring enabled Adler to meet debt payments and
avoid insolvency, and was drawn up with a steering committee of
creditors in November 2022. Under the plan, some 937.5
million euros of new money will be provided by creditors, which
will have a priority claim on Adler’s assets. In addition, bonds
maturing in 2024 were extended to 2025, and given a higher
interest rate and higher-ranking claim.   
    After the plan failed to gather sufficient support in
Germany, Adler substituted a UK company as its main issuer. As a
result the plan was eligible to be approved by a UK court.

 (Editing by George Hay and Oliver Taslic)
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