Alpine Bonds Jump as Debt Cut Thwarts Insolvency

Alpine Holding GmbH’s bonds jumped after the unprofitable Austrian builder cleared the way for a debt cut yesterday by winning creditor banks’ agreement to reduce their claims while leaving its bondholders unscathed.

Alpine’s bonds due July 2015, June 2016 and May 2017 were quoted at 18 percentage points to 20 percentage points higher than last week on German securities exchanges, according to prices compiled by Bloomberg. The debt, which has a combined nominal value of 290 million euros ($377 million), was quoted at just over 50 percent of face value in their most recent trades last week.

Lenders to Salzburg-based Alpine, a unit of Spanish builder Fomento de Construcciones & Contratas SA, reached the final steps of the deal by agreeing to include debt that would have been covered by state guarantees in the event of default, the Austrian company said in a statement late yesterday.

Bondholders won’t lose money in the debt cut, Alpine said, without elaborating on other terms of the agreement. The bonds due May 2017 jumped 41 percent to 70.2 cents on the euro, the biggest intraday increase in four months. Alpine’s debt due in 2016 was 41 percent higher at 70.25 cents, while the 2015 bonds were trading 38 percent higher at 71.01 cents.

Alpine, which built German soccer team Bayern Munich’s Allianz Arena stadium, contributed to its parent FCC’s net loss of 1.03 billion euros last year with a 300.5 million-euro charge. Austria and Germany account for about two-thirds of its output, and more than 20 percent comes from eastern and southeastern Europe.

The creditor banks, led by Erste Group Bank AG and UniCredit Bank Austria AG, agreed to reduce their claims, totaling about 520 million euros, by 30 percent in the debt-reduction deal, two people familiar with the talks said last week. The state-guaranteed portion of that debt was 150 million euros, the people said. Spokesmen for Erste and UniCredit declined to comment today.