Sweden's SBB exchanges $2.9 bln debt, eyes lower leverage (updated)

Samhallsbyggnadsbolaget I Norden AB

18/12/2024 12:20

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      Says most bondholders accept debt exchange offer
    

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      New bonds have clearer clauses, facilitating turnaround
    

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      CEO expects more property deals, lower debt
    

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      Debt conversion reduces risk from lawsuit, analysts say
    

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      SBB share price rises 22%
    

  
 (Adds CEO quote, analyst comments, updates share price in
paragraphs 6-10)
       OSLO, Dec 18 (Reuters) - Swedish real estate group SBB
 SBBb.ST  will have greater flexibility to divest property and
to reduce its overall debt after completing a bond exchange
offer on Wednesday, the company's CEO told Reuters.
    The group said bondholders had agreed to an exchange of debt
valued at 2.78 billion euros ($2.92 billion) in return for new
securities, part of an effort to overcome objections from some
creditors to its restructuring.
    Built on a public property buying spree that included social
housing, government offices, schools and hospitals, SBB stood at
the centre of a Swedish real estate bubble that unravelled from
2022 to 2023 when inflation and interest rates soared.
    SBB had set a minimum requirement of 1.7 billion euros for
going ahead with the debt exchange transaction, which the
company said set clearer bond clauses, also known as covenants,
helping facilitate the group's turnaround.
    "Most of the bondholders were friendly and have worked with
us," SBB CEO Leiv Synnes said, adding that 95% of the relevant
creditors accepted the exchange offer.
    "This is like a restart of a long-term relationship," he
added.
    The high degree of voluntary debt conversion reduces the
liquidity risk to SBB from a lawsuit, due to begin in January,
from a group of creditors demanding payback of bonds they hold,
analysts said.
    "The exchange increases the likelihood that SBB can manage a
scenario, from a liquidity perspective, where the remaining
bondholders would demand immediate redemption," Danske Bank
credit analyst Marcus Gustavsson told Reuters.
    "The equity market should show relief today that the risk of
default in SBB has lessened," Arctic Securities analyst Michael
Johansson said in a note to clients.
    SBB's share price was up 22% at 1206 GMT to 4.28 Swedish
crowns on the Stockholm bourse. It is still down more than 90%
from its 2022 peak.
    SBB has spun off several property units as independent
companies this year, and plans further restructuring.
    "We have proven that we can do property transactions in a
good manner and have a dialogue with creditors," Synnes said.
    "We understand that we need to lower our leverage, and we
will do that," he added.
    ($1 = 0.9518 euros)

 (Reporting by Terje Solsvik in Oslo and Agata Rybska in Gdansk.
Editing by Mark Potter)
 ((terje.solsvik@thomsonreuters.com; +47 918 666 70;))