COMMUNIQUÉ DE PRESSE - Orco Property Group
Le Comité de Créanciers Obligataires (le " Comité "), représentant plus d'un tiers des obligations d'Orco Property Group SA (" OPG "), a prudemment révisé le Business Plan à dix ans de la direction d'OPG (le " Plan à dix ans "), son Rapport Annuel concernant l'exercice 2009 (" AR ") rendu public en mars 2010 et son projet de plan de sauvegarde émis le 15 avril 2010. Le Plan à dix ans :
- démontre une génération de trésorerie interne faible et ne démontre pas qu'OPG générera autrement assez de trésorerie pour satisfaire au service de sa dette,
- ne fournit pas à tous les obligataires le rendement à échéance auquel ils ont droit conformément aux prospectus des obligations et néanmoins, à 614,2 millions d'euros (Plan à dix ans page 5) la dette obligataire maximale est sous-estimée.
Weak internal cash flow generation
The cash flow needed to cover scheduled payments under the safeguard term-out (based on OPG's estimate of the maximum amount of the bond liability) is E 9.5m in 2011, E 24.5m in 2012, E 25.3m in 2013 and E37.4m in 2014 (Ten Year Plan p 4).
OPG has generated E251m revenues for E29.8m Adjusted ebitda in 2009, an improvement from 2008 in EBITDA terms. However, based on 2009 adjusted EBITDA and on a management estimate of a maximum bond liability of E614.2m and 1,074.3m group bank debt net of cash, OPG's consolidated net leverage remains very significant at approximately 57x while the 2012 debt repayment under OPG's draft safeguard plan is only covered c. 1.2x. In 2012, according to the Ten Year plan (Ten Year Plan p. 4) free-cash-flow (post net capex and net divestment flows) for the Group would total E6.7m, well below the draft safeguard plan debt annuity of E24.5m, which means internal cash-flow generation would not be sufficient to service the draft safeguard plan debt payment for the year. According to the Ten Year Plan, in 2014, 2019 and 2020 again internal cash flow generation would not cover the draft safeguard plan debt payments.
According to the Ten Year Plan (p.4) such low cash-flow generation leads to various years within the plan where OPG consolidated closing cash balances, including restricted cash, would exhibit a low E20-30m level, below levels projected end-2010, despite asset disposals (E66m value and related cash of E31m in 2009 - AR p.28). Given the amount of cash tied to JVs and on escrow accounts (AR note 17, E35.2m in dec-09), there is concern that OPG's available cash would be lower than the levels needed to service the draft safeguard plan debt payments.
Given OPG's highly levered balance sheet and the fact that the group's unrestricted cash balances are only of E21.8m in dec-09 on a fully available and unrestricted basis(AR note 17 ), greater focus should be placed on generating cash-flows and cash EBITDA.
In addition the Committee notes that only 35% of OPG's group's bank loans were successfully renegotiated in 2009 ( AR p.14) and that the total carrying value of bank loans not yet renegotiated and in breach due to FINANCIAL covenants was of E364.7m by end-2009, i.e. 34% of the total E1.07bn bank debt (AR p. 43 of the consolidated financial statements attached to the AR).
Furthermore, the Committee is concerned that OPG's balance sheet will remain highly leveraged (reported 84.4% LTV as of Dec-09, AR, p.44), which is likely to hinder OPG's ability to take advantage of the ongoing recovery in commercial real estate markets in Central Eastern Europe and Germany.
Incorrect calculation of maximum bond liability
OPG's estimate of its maximum bond liability is incorrect because, at least with respect to the bonds issued in 2005 maturing in 2010, those issued in 2006 maturing in 2013 and those issued in 2007 maturing in 2014, OPG does not provide the bondholders with the bond yield to maturity to which they are entitled pursuant to the respective bond prospectuses. The comparison between the yield to maturity resulting from OPG's proposed payment schedule under the draft safeguard plan and the yield to maturity under the relevant bond prospectuses is: 5.71% instead of 8.76% on the bonds issued in 2005 maturing in 2010, 3.74% instead of 5.65% on the bonds issued in 2006 maturing in 2013 and 5.28% instead of 7.383% on the bonds issued in 2007 maturing in 2014. With respect to these three series of bonds and based on OPG's proposed payment schedule under the draft safeguard plan, OPG's maximum bond liability is therefore E 704,380,143, instead of E 559,120,693.
For all of these reasons, the Committee does not consider that OPG's Ten Year Plan properly addresses OPG's debt burden.
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