Lehman Real Estate, Belvedere, U.K. Insolvencies: Bankruptcy
Lehman Brothers Holdings Inc. may sell its largest real-estate asset, the apartment-complex owner Archstone it acquired in a $22 billion leveraged buyout, to two affiliates for “yet undefined consideration,” according to a court filing by Gerard Uzzi, a lawyer for Lehman creditors.
The two affiliates are Lehman Commercial Paper Inc. and Luxco, or Luxembourg Residential Properties Loan Finance S.a.r.l, according to a Sept. 20 filing by Uzzi, who represents a group of defunct Lehman’s creditors including hedge fund Paulson & Co.
Archstone, which has required two bailouts from its bankers in the last two years amid the real-estate slump, has ownership interests in hundreds of apartment developments from Washington and New York to Los Angeles and San Francisco.
The deal might represent “the most valuable give-up” by the Lehman holding company to its affiliates, Uzzi said in a footnote to a filing protesting another deal involving Lehman, LCPI and Luxco. Lehman currently is trying to untangle numerous claims and obligations with its bankrupt and non-bankrupt affiliates.
Details of the Archstone transaction weren’t given in the court filing. Uzzi didn’t return calls and e-mails seeking comment.
The sale referred to by the creditors is related to the two affiliates’ earlier aid for the bailout of two Lehman banks.
“Certain pieces” of an Archstone loan that had been pledged to the banks will be returned to the Lehman affiliates, Jeff Fitts, co-head of LBHI’s real estate group, said in an e- mailed statement.
“These pledges effectively go away. Ownership of debt tranches will not move,” he said.
CFS to Buy 4 Retail Outlets From DFO Portfolio for A$498 Million
The real estate trust that invests in Australian shopping centers today completed a deal to buy one mall in Sydney and three in Melbourne from the outlet chain, Sydney-based CFS Retail said in a statement to the Australian stock exchange.
The trust will fund the purchase through a A$540 million institutional equity raising, it said in the statement.
“This is a unique opportunity to enter an increasingly important, yet immature retail format and sub-sector in Australia,” Michael Gorman, fund manager at CFS Retail, said in the statement.
Austexx Pty Ltd., DFO’s Melbourne-based parent, has put its A$1.5 billion of shopping outlets up for sale to pay off debt accumulated before the global financial crisis. It agreed to refinance A$1 billion of debt to avoid going into administration, the Financial Review reported on Aug. 20.
CFS Retail, managed by Colonial First State Property Retail Pty Ltd., will buy DFO shopping malls in Homebush in Sydney, South Wharf in the Docklands in Melbourne, and at domestic airports in the Melbourne suburbs of Moorabinn and Essendon, it said in today’s statement.
Belvedere May Revise Asset Sale Calendar After Court Ruling
Belvedere SA said a ruling by a court in Dijon on Sept. 21 may cause it to revise its asset-sale calendar as it doesn’t have to pay interest on a floating rate note maturing in 2013.
The company said it will appeal the court’s ruling to validate the debt claimed by Bank of New York Mellon Corp.
U.K. Insolvency Rate Drops to Three-Year Low, Experian Says
The U.K. rate of business insolvencies fell to a three-year low in August as companies’ financial positions improved, Experian Plc said.
The proportion of companies that failed in the month fell to 0.07 percent, the lowest since June 2007, according to a report released by e-mail today in Nottingham, England. Experian is the world’s biggest credit-checking company. Total business insolvencies fell to 1,391, compared with 1,783 a year earlier.
Hyundai Engineering Creditors Set Nov. 12 Bid Deadline
Hyundai Engineering & Construction Co. creditors set a Nov. 12 deadline for the submission of main bids in buying a stake worth $2.3 billion in South Korea’s biggest builder.
The creditors will receive preliminary bids for their 35 percent by Oct. 1, sale arrangers Bank of America Corp.’s Merrill Lynch & Co., Woori Investment & Securities Co. and Korea Development Bank said in a public notice in newspapers yesterday.
Hyundai Group has said it plans to bid for a stake in the builder which was its predecessor’s flagship before falling into the hands of creditors in 2001. Hyundai Motor Group, also previously part of the old Hyundai Group, may make a rival offer, according to the Wall Street Journal.
The nine creditors, including Korea Exchange Bank and state-run Korea Finance Corp. plan to sell their stake for as much as 20 percent more than its market value, an official at one of the debt holders said earlier this month. He declined to be identified because the information isn’t public.
Hyundai Engineering fell 2.3 percent to 69,000 won on Sept. 20 in Seoul trading. The company has a market value of $6.65 billion, according to Bloomberg data. Korean markets have been closed since Sept. 20 because of the country’s public holidays.
The creditors plan to choose a preferred bidder by the end of the year, Korea Exchange Bank said in June.
Liverpool Directors Oppose Owners’ Attempts at Refinancing
Liverpool’s directors will oppose any attempt by owners George Gillett and Tom Hicks to refinance their debt instead of selling the 18-time English soccer champion, Managing Director Christian Purslow said.
The American owners owe 282 million pounds ($442 million) to Royal Bank of Scotland Group Plc after buying the club in 2007. They’re struggling to get an extension of their loan by an Oct. 6 deadline. Blackstone Group LP’s GSO Capital Partners unit rejected a refinancing plan.
Hicks and Gillett are continuing to try to sell the team as soon as possible, although “they haven’t had an offer yet that they like,” Purslow said. Refinancing would require board approval, which isn’t likely to come, he said. The five-time European champion failed to reach this year’s Champions League, which can add more than 30 million pounds in revenue. While Hicks in April said he wanted as much as 800 million pounds for the team, no bidder has approached the asking price.
“Any occurrence of indebtedness by Liverpool Football Club needs full board approval,” Purslow said in an interview on the team’s website. “The non-owner directors have made it clear that’s not what we want to see.”
Liverpool, which sits a point above the relegation zone with five points from five matches, is in good financial shape, Purslow said. The club has cash and banking facilities that last until after the end of next season, leaving Purslow saying he “cannot perceive a situation where Liverpool Football Club could go into administration,” a form of bankruptcy. The team is highly profitable, he said.
To contact the editor responsible for this story: Anthony Aarons at aaarons@Bloomberg.net.