Glitnir Bank Luxembourg recently announced that it had acquired Bovista Invest from bankrupt Danish company Centerplan Nordic, whose financial collapse occurred in late 2008.
Glitnir, which represents the remnants of an insolvent Icelandic bank, is in the process of voluntary liquidation itself and in the middle of a five-year workout designed to maximise the return on its assets, among them the junior financing of the Bovista portfolio.
The focal point of the acquisition is a 370,000 m2 portfolio of property in Sweden, most of it residential. However, as well as including 67 large multi-family properties that provide housing for 4,200 families, the portfolio, spread among Göteborg, Västerås, Norrköping and Skövde in southern Sweden, also has 48,000 m2 of commercial space.
Bovista has been obtained with a combination of debt and equity amounting to SKr2.3bn (€250m). The transaction was the culmination of three years’ hard work, according to Ari Danielsson, the Icelandic, Luxembourg-based managing director of Reviva Capital, partly owned by Glitnir and the firm that advised it and an unnamed international lender that has extended and restructured its senior debt package in support of the acquisition.
The key to the deal
By extending Bovista’s finance facility, Danielsson says the senior lender provided the key to the deal, ably assisted by junior lender Glitnir Bank Luxembourg, which converted part of its original loan to equity.
Glitnir now plans to manage and build on the portfolio over the medium to long term and will invest Skr130m in the assets, both to overcome the maintenance backlog that has accumulated since Centerplan collapsed and to make improvements such as increasing energy efficiency.
Bovista Sweden will be reappointed to actively manage the portfolio. “The team at Bovista Sweden has remained committed throughout this extended process and has continued to deliver value despite the very challenging times,” says Danielsson.
The Bovista portfolio has “significant potential value”, as yet unrealised owing to the hiatus that occurred following Centreplan’s demise and during which Bovista’s future was uncertain, hence the need for further investment. Danielsson explains that, in Sweden’s highly controlled rented residential property sector, energy costs are incorporated in the rent and this provides a significant incentive for the landlord to reduce energy consumption. There is a two-year investment plan but precise timing depends on cashflow.
“A long-term ownership mentality is key in assets like this,” says Danielsson. “Glitnir has proved in other similar situations that a successful restructuring needs to be built on strong fundamentals and the long-term view of an active owner. The relationship between the parties involved has, over the years, grown to become very close and trusting, which was crucial to achieving this outcome,” he says.
Danielsson says that similar restructuring efforts in other markets, including Luxembourg, Denmark, Norway and Germany, have proven that it is possible to unlock challenging situations for the benefit of everyone involved.
The deal took so long to come to fruition partly because Centreplan Nordic’s bankruptcy fell under Danish law and the size of the company dictated that a consortium of three trustee law firms were involved. “That wasn’t the cause of problems but it doesn’t simplify things,” says Danielsson.
Glitnir is itself no stranger to financial turmoil and restructuring and Reviva Capital was originally incorporated to restructure the Icelandic Glitnir Bank when it collapsed. Reviva is jointly owned by its own management – Danielsson among them – and Glitnir Luxembourg.
Glitnir Luxembourg is currently in a voluntary and solvent winding-up procedure, in which the bank’s assets are to be realised over a five-year period with the aim of maximising their value. The bank entered moratorium in October 2008 following the collapse of the parent company in Iceland.
Glitnir’s Resolution Committee converted the parent company’s loans to equity as part of the financial restructuring of Glitnir in Luxembourg, and it holds all of the bank’s equity. Agreements were reached with the bank’s largest creditors and the authorities in Luxembourg during the moratorium period. When the moratorium ended in April 2009, Glitnir surrendered its banking license in Luxembourg and began winding-up.
In Luxembourg Reviva is described as a “Professional of the Financial Sector” (PSF) and is supervised by Luxembourg’s financial supervisory authority. It is also licensed for debt collection, “client communication and administration” as well as being an economic advisor. The company’s clients include banks, investment funds and liquidators and it currently has €1.5bn assets under management, equating to a gross value of €2.6bn, mostly loans to property companies and holding companies, but also to individuals.
Reviva Capital was appointed by Glitnir’s liquidator in Luxembourg to manage Glitnir’s loan book there, mainly loans to European property companies secured by assets chiefly in Germany, the Nordic countries and the UK in roughly equal proportions.
Reviva has also been instrumental in the liquidation of Landsbanki Luxembourg following the insolvency of its Icelandic parent in 2008.