CHR Bygga Bostäder Holding AB (publ) initiates a written procedure in respect of its bonds

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2019-10-04 17:00

CHR Bygga Bostäder Holding AB (publ) (the “Company”) has on the date hereof given instructions to Intertrust (Sweden) AB (the “Agent”), being the agent under its senior secured bonds with ISIN SE0010023770 (the “Bonds”) to initiate a written procedure in order to request that the bondholders vote in favour of certain amendments and waivers in respect of the terms and conditions of the Bonds, authorisations to the Agent to enable the request and a partial redemption.

The formal and detailed notice for the written procedure is attached to this press release and also available from the Company’s website

Due to historically high fixed costs in combination with cost overrun in certain projects and a weak residential property market in Sweden from 2017 and onwards the Company and its subsidiaries has suffered financial difficulties.

The Company’s subsidiary CHR Bygga Bostäder Entreprenad AB (“Entreprenad”) filed for company reorganisation (Sw. företagsrekonstruktion) on 22 July 2019 with a view to restore the equity in the Company and Entreprenad, to avoid a situation where Entreprenad would have to file for bankruptcy and to improve the possibilities of the Bygga Bostäder group to survive. The application was approved by the district court on 23 July 2019 (the “Entreprenad Reorganisation”). A company reorganisation means that the company is protected from bankruptcy and has the ability to negotiate with its non-secured suppliers and lenders on a write-down of its debt. In Entreprenad, the total non-secured liabilities amount to approximately SEK 258,346,941 where approximately SEK 200,083,819 (the “Claim”) is a debt to the Company pledged as security under the Bonds.

On 22 July 2019 the Company issued a press release relating to a term sheet agreement (as amended, restated and supplemented from time to time) (the “Term Sheet”) for a restructuring of the outstanding Bonds and the Entreprenad Reorganisation. The Term Sheet was entered into with shareholders representing ca. 63 per cent. of the outstanding shares and ca. 50 per cent. of the votes in the Company and holders representing ca. 46.7 per cent. of the Bonds. The Company informed in the press release that it would issue a request for a written procedure among its bondholders in order to receive the requisite authorisations.

It is contemplated that Entreprenad will shortly offer its unsecured creditors a composition of 25 per cent. (i.e. a write down of the unsecured debt of 75 per cent.). By instructing the Agent to accept a 75 per cent. write-down of the claim that secures the Bonds, the bondholders help the subsidiary, Entreprenad, to considerably improve its financial standing and possibility to survive and finalise the construction projects, which creates a possibility for the Company to make repayments to the bondholders. Furthermore, the Company proposes that the bondholders accept a solution where the Company and/or the bondholders instead of receiving a dividend in cash, receive in cash or in kind, certain of Entreprenad’s claims relating to certain projects. Such other claims will to the extent practically possible and reasonable be pledged to secure the Bonds. When the claims and assets have been converted into cash and used to pay the Bonds and it is not expected that further amounts will be received with respect to the dividend distribution in connection with the Entreprenad Reorganisation and there are otherwise no prospects for further payment, any remaining amounts under the Bonds will be forgiven. Hence, the Claim will be replaced by other claims with a value that will be estimated to be at least as high as the amount that otherwise would have been paid out in cash as composition dividend.

On 10 September 2019 the Company issued a press release stating that also the Company filed for company reorganisation to avoid bankruptcy. The application was approved by the district court on 11 September 2019 (the “Issuer Reorganisation” and together with the Entreprenad Reorganisation the “Reorganisations”). The Reorganisations are currently ongoing. In order to maximise the chances of a composition in the Issuer Reorganisation being approved, the Company requests that the bondholders authorise the Agent to waive the bondholders’ position as secured creditors in an amount of SEK 65,000,000 with the effect that the Agent will be able to vote in favour of the composition for such amount and that such amount will be included in the composition. The Company has an immediate need to relieve its balance sheet from debt and, hence, the Company further requests that the bondholders waive their right to a composition dividend with respect to the part of the claim that the Agent will vote for in the composition. If the composition is successful, this will have the effect that a total amount of SEK 65,000,000 will be written off under the Bonds in connection with the composition. The expected recovery to the Bondholders shall not be negatively affected as the projection is that there will remain Bonds outstanding in the equivalent amount (or exceeding) of what may be repaid by the proceeds received from the contemplated dividend from the debt composition in the Entreprenad Reorganisation.

The Company is confident that the above described solutions offer better prospects for recovery by the bondholders and thus is to the benefit of the bondholders and is necessary to safekeep their position as secured lenders.

The Company has informed the Agent that it has received undertakings from bondholders representing 57.62 per cent. of the Adjusted Nominal Amount (as defined in the terms and conditions of the Bonds) of the Bonds to vote in favour of the proposal.

In order to achieve the abovementioned objectives the request from the Company in the written procedure relates to (i) a permanent amendment of the terms and conditions for the Bonds (including, but not limited to, removing certain reporting requirements and requirements as to listing and admission to trading of the Bonds and certain restrictions in the terms and conditions of the Bonds in order to achieve overall cost savings in the on-going business of the Company and facilitate the operations of the Bygga Bostäder group) in accordance with what was communicated in the press release on 22 July 2019, (ii) waivers of certain defaults arising under the terms and conditions of the Bonds, and (iii) authorisations to the Agent to enable the request, and further specified in the formal and detailed notice for the written procedure, also effective subject to certain conditions occurring.

The conditions for the effectiveness of the bondholders’ approval (if given) to carry out the request are specified in detail in the formal and detailed notice for the written procedure.

To be eligible to participate in the written procedure a person must fulfil the formal criteria for being a bondholder on
9 October 2019. This means that the person must be registered on a securities account with Euroclear Sweden AB as a direct registered owner (Sw. 
direktregistrerad ägare) or authorised nominee (Sw. förvaltare) with respect to one or several Bonds.

The Agent will in accordance with the terms and conditions of the Bonds issue a formal notice for the written procedure by post to all persons registered as holders of Bonds on 3 October 2019. The written procedure will end at 17:00 (CET) on
30 October 2019 but may be ended earlier if a requisite majority of consents of the Total Adjusted Nominal Amount (as defined in the terms and conditions of the Bonds) have been received by the Agent in advance of such date. Information about the decision taken under the written procedure will: i) be sent by notice to the persons registered as bondholders and ii) be published on the websites of a) the Company and b) the Agent.

For further information, please contact: 

Hadar Cars, chairman of the board
Telephone: +46735445845

Johannes Bertorp, Restructuring Team and representing the Term Sheet Bondholders
Telephone: +46701880000

This information is information that CHR Bygga Bostäder Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 17:00 CET on 4 October 2019. 

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