IVG Slides After Proposing Debt to Equity Swap

IVG Immobilien AG (IVG), the German real estate investment company restructuring 3 billion euros ($3.9 billion) of debt, fell the most in almost a month in Frankfurt after saying it plans to issue shares to pay creditors.

IVG was down 17 percent to 32 cents at the 5:30 p.m. close of trading, the biggest decline since May 8, cutting its market value to 67 million euros. The Bonn-based company is proposing to swap loans and bonds for new shares to reduce liabilities by as much as 1.75 billion euros, according to a statement on May 31 after markets closed.

IVG, once Germany’s largest commercial-property company, has lost about 97 percent of its market value since 2008 following property writedowns and difficulties paying debt. The company and its funds own buildings valued at 21 billion euros, including about a 50 percent stake in London’s Gherkin tower.

“The planned debt/equity swap will lead to a significant dilution of the current shareholders,” Jochen Rothenbacher, an Equinet analyst who has a sell recommendation on the stock, wrote in a report today.

The company’s annual shareholders meeting, where it aims to present a restructuring proposal, was delayed to Aug. 30 from Aug. 14, the company said in the May 31 statement.

IVG will begin restructuring talks with creditors May 31, two people with knowledge of the matter said that day.

The company has 3.2 billion euros of debt due by the end of next year, most of it borrowed to fund operations and acquire property, according to its annual report.

IVG declined the most ever in Frankfurt trading March 27 after the company said it would need a financial restructuring. At the same time IVG reported a 2012 net loss of 98.7 million euros and said its loan-to-value ratio, a measure of indebtedness, was higher than planned at 70.6 percent.

To contact the reporter on this story: Dalia Fahmy in Berlin at dfahmy1@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.