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2019-07-22

Bygga Bostäder: CHR Bygga Bostäder Holding AB (publ) has entered into a term sheet for a contemplated restructuring of the...

2019-07-22 13:10

CHR Bygga Bostäder Holding AB (publ) (the "Company") has entered into
a term sheet (the "Term Sheet") for a contemplated restructuring of
the outstanding bonds in the Company's Senior Secured Floating Rate
Bonds with ISIN SE0010023770 (the "Bonds") and a company
reorganisation of the Company's subsidiary CHR Bygga Bostäder
Entreprenad AB ("Entreprenad") with a view to restore the equity in
the Company and Entreprenad and avoid a situation where Entreprenad
must be declared bankrupt due to insolvency. The Term Sheet is
entered into with shareholders representing ca. 63 per cent. of the
outstanding shares and ca. 50 per cent. of the votes in the Company,
holders representing ca. 46.7 per cent. of the Bonds (the "Term Sheet
Bondholders"). The implementation of the transactions contemplated by
the Term Sheet is further conditioned upon several events occurring
which are outside of the Company's control.

On 23 November 2018 the Company published that the Board of Directors
of the Company and its subsidiary CHR Bygga Bostäder Entreprenad AB
each had resolved to prepare a balance sheet for liquidation purposes
(kontrollbalansräkning). On 10 December 2018 the Company issued a
notice for a general meeting to consider whether the Company shall go
into liquidation.

The Company took measures in order to restore the equity in
Entreprenad by way of lowering the share capital in Entreprenad and
relocating assets within the group as set out and contemplated by the
Term Sheet for a recapitalisation with a view to restore the equity
in the Company. The Term Sheet is entered into, originally on 31
December 2018 (as amended and restated on 30 January 2019), with
shareholders representing 73 per cent. of the outstanding shares and
votes in the Company, holders representing ca. 58 per cent. of the
outstanding Bonds and a separate creditor (the "Recapitalisation Term
Sheet").

The Company has now entered into the Term Sheet for the contemplated
restructuring of the Bonds and a company reorganisation of
Entreprenad with a view to restore the equity in the Company and
Entreprenad and avoid a situation where Entreprenad must be declared
bankrupt due to insolvency. The implementation of the transactions
contemplated by the Term Sheet is further conditioned upon events
occurring which are outside of the Company's control.

The Term Sheet involves a debt write-down across the Company and its
subsidiaries and a number of changes to the capital structure and
governance of the Company, including the following principal changes,
which the Term Sheet Bondholders support and consider to be necessary
to recover as much value as possible of its claim via the Bond (which
otherwise may be extinguished or of considerably less value).

Reorganisation and Debt Composition

In order to restore the equity in the Company and to avoid a situation
where Entreprenad must be declared bankrupt due to insolvency,
Entreprenad will undertake a debt composition (Sw. ackord) which
yields at least 25 per cent. of the total amount of the claims held
by Entreprenad's creditors by way of company reorganisation
proceedings (Sw. företagsrekonstruktion) (the "Debt Composition").
The main creditor of Entreprenad is the Company by its claim on
Entreprenad in the amount of approximately SEK 198,240,678 (the
"Holding Claim") which is subject to security under the Bonds which
indirect makes the bondholders under the Bonds the main creditor of
Entreprenad. The Debt Composition shall be construed in such way that
the bondholders under the Bonds receive certain assets (i.e. the
Projects Brandholmen 1, Brandholmen 2, Brandholmen 3, Brandholmen 4
and Najaden) and proceeds from Brandholmen 2 (less costs for the
contemplated restructuring), transferred to a newly incorporated
subsidiary of Entreprenad (the "NewCo"), as consideration in kind (by
way of receiving the shares, pro ratafor each Bond, in the NewCo)
under the Debt Composition (the "Bondholders Debt Composition
Consideration").

Debt write-down/conversion of the loan granted under the terms of the
Bonds and conversion of preferential shares class A

Subject to receiving the Bondholders Debt Composition Consideration
the Bonds shall be written-down, partly or in full. If a certain
shareholder procure (i) the financing of running costs (without using
proceeds of Brandholmen 2) for the Company and Entreprenad during the
reorganisation and (ii) the conversion or extension of debt owed by
the Company to a separate creditor, the bondholders under the Bonds
shall consent to a full debt-write down of the Bonds and a conversion
of the preferential shares class A into ordinary shares equal to one
third of the total amount of ordinary shares outstanding in the
Company (if, and only if, all running costs are borne by the
shareholder (or procured by the shareholder, without using proceeds
of Brandholmen 2). Should conditions (i) and (ii) not be entirely
met, no conversion of preferential shares Class A needs to be made
and the Bonds should be partly written-down, leaving an amount equal
four (4) times the used proceeds from Brandholmen 2 outstanding of
the Bonds, should the Brandholmen 2 proceeds be used for running
costs - to be converted into ordinary shares at a pre valuation of
SEK 25,000,000 at completion of the reorganisation).

The amount of debt write-down of the Bonds is further dependent on the
higher of (x) the market value of the Bondholders Debt Composition
Consideration and (y) the face value of the Bondholders Debt
Composition Consideration not exceeding the recoverable amount of the
Company under the Holding Claim in the Debt Composition. Should (x)
or (y) exceed the recoverable amount of the Company under the Holding
Claim, an amount equal to the difference shall (in addition to any
amount to be outstanding as per the other conditions above) remain
outstanding under the Bonds.

Extension of conversion of preferential shares Class A

According to the Recapitalisation Term Sheet, the preferential shares
Class A held by the bondholders under the Bond shall be converted
into preferential shares Class C, provided that the Company raises
SEK 50 million in cash no later than 31 August 2020. By virtue of the
Term Sheet the relevant final date for the cash equity injection in
the Company is extended to 31 August 2021.

Debt write-down in relation to Entreprenad's claims

During the reorganisation period and until the completion of the Debt
Composition, all claims by Entreprenad on the tenant housing
associations as a consequence of investments and costs in Project
Brandholmen 1, Brandholmen 2, Brandholmen 3 and Brandholmen 4 will be
subordinated until final amounts are determined in order to not cause
a balance sheet bankruptcy in any of the tenant housing associations
involved in Project Brandholmen 1, Brandholmen 2, Brandholmen 3 and
Brandholmen 4. Any amounts of claims by Entreprenad on the tenant
housing associations exceeding (i) deposits paid to the tentant
housing associations and actually received (taking into account any
reductions compared to what is stated in the relevant financial plan)
and (ii) the amount of granted mortgage loans received (taking into
account any changes in size of any granted mortgage loan made
compared to what is stated in the relevant financial plan), will be
written-off by Entreprenad.

Operational financing of the Company

The Shareholders shall use their reasonable best efforts to finance or
procure the receipt of financing for the Company's and its
subsidiaries' operational needs for a time period of at least six (6)
months after finalisation of the company reorganisation in order to
avoid insolvency of the Company and its subsidiaries during the
relevant time period.

Amendments to the terms and conditions of the Bonds

The terms and conditions of the Bonds shall be amended as follows.

Mandatory amortisation: provided that any Bonds remain outstanding at
such time, the mandatory amortisation triggered if the Company
doesn't raise no less than SEK 50 million in new common equity by way
of cash payment by no later than 31 August 2020, shall be postponed
one (1) year so that the relevant dates for amortisation and cash
equity injection shall be 31 August 2021.

Redemption and Repurchase of the Bonds: thewrite-off contemplated by
the Term Sheet, as summarised under "Debt write-down/conversion of
the loan granted under the terms of the Bonds and conversion of
preferential shares class A" above, to be constituting voluntary
total redemption or voluntary partial redemption (as applicable and
subject to conditions set out under that paragraph above).

Disposal of Assets: Disposal of assets to NewCo as contemplated by the
Term Sheet shall be permitted.

Events of Default: the reorganisation and debt composition as
contemplated under the Term Sheet shall not constitute events of
default.

Governance and resource and information allocation

During the reorganisation a certain team comprising of representatives
of a syndication of certain bondholder will be responsible for
project management of the restructuring process, negotiations,
settlement and financial planning and calculations in connection with
the restructuring as well as managing the Brandholmen projects and
certain other tasks in connection therewith. The shareholders,
together and in smaller team for certain tasks, will be responsible
for, inter alia, operational management and administration of the
Company and Entreprenad as well as legal representatives and
responsible for securing financing and provide necessary information
for purposes of successfully complete the debt composition and the
transactions contemplated by the Term Sheet.

Conditionalities

The implementation of the transactions contemplated by the Term Sheet
will be conditional upon several events occurring which are outside
of the Control of the Company.

Required consents

The debt composition as a result of the company reorganisation of
Entreprenad pursuant to the Term Sheet will, in addition to the
approval of a court of general jurisdiction ordering the commencement
of proceedings for judicial composition and the appointment and
subsequent approval of, and as put forth by, the appointed
reconstruction administrator, ultimately require the consent of (i)
holders of 75 per cent. of the total capital amount of all claims by
creditors of Entreprenad and (ii) 75 per cent. of the voting
creditors of Entreprenad. The restructuring of the Bonds pursuant to
the Term Sheet will ultimately require the consent of 66 (2/3) per
cent. of the adjusted nomin...

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