Orco will have to restructure its bond debt under an agreement with its suitor, Colony Capital. The two companies have been working since April to hammer out an agreement under which Colony (which has substantial property holdings in Europe) could take a stake in the ailing developer. Yesterday was the deadline for reaching a conclusion.
Based on the terms of the amendment signed today and for a period up to November 30, ColOG, a company controlled by funds advised by Colony Capital, will be granted warrants. These warrants will be subject to the approval of the Extraordinary Shareholder Meeting, and will allow ColOG to subscribe to an issue of Orco Property Group shares at €7 per share amounting to about €80m. ColOG’s equity stake in OPG should not exceed 30 percent. All OPG shareholders will also be offered a share capital increase at €7 per share and with a ratio of one new share for one existing share.
The deal is still subject to approval at an extraordinary shareholders meeting to be held on July 8. Read Orco’s entire press release here.
Update: Reuters quote a note from Wood & Co analysts that says it’s bad news: “We view the outcome of the negotiations with Colony as negative, because of the additional conditions set and reduced capital increase”. This matches the tone of FallingRocks in the comment section of this post. (Which you can see and/or contribute to by clicking on the comments button)