NOEL SMYTH, the property developer, is preparing a private equity-backed bid to buy out bondholders in his British property portfolio.
Smyth’s Alburn Real Estate Capital (Arec) owns 45 commercial properties in the UK comprising 29 offices, 13 industrial properties, two retail outlets and a shopping centre.
The purchases were funded by a £335m (€408m) bond issue. The bondholders were due to be paid in 2016 and are being bought back at a discount.
Smyth is expected to offer the most money to senior, or class A, bondholders. These investors are owed £224m. A higher discount will apply to four other classes of bondholders. In a note to the stock exchange last week, Arec said that “certain of the directors” of the company are “considering making a tender offer in respect of all the notes presently outstanding”.
It added: “Over the next few weeks, the Offeror will be discussing its plans with noteholders with a view to getting an initial assessment of whether, and at what price, they would be willing to tender their Notes.”
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Smyth, the statement said, “does not currently have any firm funding commitments”.
Alburn is believed to be in talks with two private equity groups, from America and Britain. It said it had received “assurances that when they have a strong enough indication that a significant number of notes are likely to be tendered, they will be able to provide a firm commitment”.
Any offer is dependent on it acquiring at least three quarters of the outstanding notes in each class. Alburn said it could not comment beyond its statement last week.
In April, Fitch, the ratings agency, downgraded Alburn’s commercial mortgage loans and put its Class A and B notes on “outlook negative”.
Arec assets are not destined for the National Asset Management Agency (Nama) as it was funded by the international bond market. Smyth’s other borrowings, largely relating to the Square Shopping Centre in Tallaght, are due to be transferred to Nama next month.