GERMANY – Creditors of German real estate company IVG have agreed to a refinancing plan including a debt-for-equity swap in a last-minute agreement.

IVG announced earlier this month that it might have to dissolve the holding company after the parties involved failed to reach a refinancing agreement by the 30 July deadline.

Negotiations were taken up again, however, and creditors came up with a refinancing plan over the weekend.

They agreed to waive part of their shares in exchange for control over the company.

The existing share capital will be reduced to 0.5%, with shares being exchanged 200:1.

In turn, the main creditors – in the €1.35bn SynLoan I, including a loan by German regional bank LBBW, and the €400m convertible bond – will see their bonds converted into shares in a debt-for-equity swap.

This means they will be holding almost 100% of the IVG’s shares.

Further, the SynLoan I creditors agreed to provide a bridge loan of €140m to “cover additional liquidity needs” and “safeguard the company’s continuation until the conclusion of its restructuring”, IVG said.

IVG also announced a €350m loss, which is more than half of its company share value, making the equity reduction even more expensive for participating shareholders.