må, jul 22, 2019 13:10 CET

2019-07-22 13:10

CHR Bygga Bostäder Holding AB (publ) (the “Company”) has entered into a term sheet (the “Term Sheet”) for a contemplated restructuring of the outstanding bonds in the Company’s Senior Secured Floating Rate Bonds with ISIN SE0010023770 (the “Bonds”) and a company reorganisation of the Company’s subsidiary CHR Bygga Bostäder Entreprenad AB (“Entreprenad”) with a view to restore the equity in the Company and Entreprenad and avoid a situation where Entreprenad must be declared bankrupt due to insolvency. The Term Sheet is entered into with shareholders representing ca. 63 per cent. of the outstanding shares and ca. 50 per cent. of the votes in the Company, holders representing ca. 46.7 per cent. of the Bonds (the “Term Sheet Bondholders”). The implementation of the transactions contemplated by the Term Sheet is further conditioned upon several events occurring which are outside of the Company’s control.

On 23 November 2018 the Company published that the Board of Directors of the Company and its subsidiary CHR Bygga Bostäder Entreprenad AB  each had resolved to prepare a balance sheet for liquidation purposes (kontrollbalansräkning). On 10 December 2018 the Company issued a notice for a general meeting to consider whether the Company shall go into liquidation.

The Company took measures in order to restore the equity in Entreprenad by way of lowering the share capital in Entreprenad and relocating assets within the group as set out and contemplated by the Term Sheet for a recapitalisation with a view to restore the equity in the Company. The Term Sheet is entered into, originally on 31 December 2018 (as amended and restated on 30 January 2019), with shareholders representing 73 per cent. of the outstanding shares and votes in the Company, holders representing ca. 58 per cent. of the outstanding Bonds and a separate creditor (the “Recapitalisation Term Sheet”).

The Company has now entered into the Term Sheet for the contemplated restructuring of the Bonds and a company reorganisation of Entreprenad with a view to restore the equity in the Company and Entreprenad and avoid a situation where Entreprenad must be declared bankrupt due to insolvency. The implementation of the transactions contemplated by the Term Sheet is further conditioned upon events occurring which are outside of the Company’s control.

The Term Sheet involves a debt write-down across the Company and its subsidiaries and a number of changes to the capital structure and governance of the Company, including the following principal changes, which the Term Sheet Bondholders support and consider to be necessary to recover as much value as possible of its claim via the Bond (which otherwise may be extinguished or of considerably less value). 

Reorganisation and Debt Composition

In order to restore the equity in the Company and to avoid a situation where Entreprenad must be declared bankrupt due to insolvency, Entreprenad will undertake a debt composition (Sw. ackord) which yields at least 25 per cent. of the total amount of the claims held by Entreprenad’s creditors by way of company reorganisation proceedings (Sw. företagsrekonstruktion) (the “Debt Composition”). The main creditor of Entreprenad is the Company by its claim on Entreprenad in the amount of approximately SEK 198,240,678 (the “Holding Claim”) which is subject to security under the Bonds which indirect makes the bondholders under the Bonds the main creditor of Entreprenad. The Debt Composition shall be construed in such way that the bondholders under the Bonds receive certain assets (i.e. the Projects Brandholmen 1, Brandholmen 2, Brandholmen 3, Brandholmen 4 and Najaden) and proceeds from Brandholmen 2 (less costs for the contemplated restructuring), transferred to a newly incorporated subsidiary of Entreprenad (the “NewCo”), as consideration in kind (by way of receiving the shares, pro ratafor each Bond, in the NewCo) under the Debt Composition (the “Bondholders Debt Composition Consideration”). 

Debt write-down/conversion of the loan granted under the terms of the Bonds and conversion of preferential shares class A 

Subject to receiving the Bondholders Debt Composition Consideration the Bonds shall be written-down, partly or in full. If a certain shareholder procure (i) the financing of running costs (without using proceeds of Brandholmen 2) for the Company and Entreprenad during the reorganisation and (ii) the conversion or extension of debt owed by the Company to a separate creditor, the bondholders under the Bonds shall consent to a full debt-write down of the Bonds and a conversion of the preferential shares class A into ordinary shares equal to one third of the total amount of ordinary shares outstanding in the Company (if, and only if, all running costs are borne by the shareholder (or procured by the shareholder, without using proceeds of Brandholmen 2). Should conditions (i) and (ii) not be entirely met, no conversion of preferential shares Class A needs to be made and the Bonds should be partly written-down, leaving an amount equal four (4) times the used proceeds from Brandholmen 2 outstanding of the Bonds, should the Brandholmen 2 proceeds be used for running costs – to be converted into ordinary shares at a pre valuation of SEK 25,000,000 at completion of the reorganisation). 

The amount of debt write-down of the Bonds is further dependent on the higher of (x) the market value of the Bondholders Debt Composition Consideration and (y) the face value of the Bondholders Debt Composition Consideration not exceeding the recoverable amount of the Company under the Holding Claim in the Debt Composition. Should (x) or (y) exceed the recoverable amount of the Company under the Holding Claim, an amount equal to the difference shall (in addition to any amount to be outstanding as per the other conditions above) remain outstanding under the Bonds. 

Extension of conversion of preferential shares Class A

According to the Recapitalisation Term Sheet, the preferential shares Class A held by the bondholders under the Bond shall be converted into preferential shares Class C, provided that the Company raises SEK 50 million in cash no later than 31 August 2020. By virtue of the Term Sheet the relevant final date for the cash equity injection in the Company is extended to 31 August 2021.

Debt write-down in relation to Entreprenad’s claims

During the reorganisation period and until the completion of the Debt Composition, all claims by Entreprenad on the tenant housing associations as a consequence of investments and costs in Project Brandholmen 1, Brandholmen 2, Brandholmen 3 and Brandholmen 4 will be subordinated until final amounts are determined in order to not cause a balance sheet bankruptcy in any of the tenant housing associations involved in Project Brandholmen 1, Brandholmen 2, Brandholmen 3 and Brandholmen 4. Any amounts of claims by Entreprenad on the tenant housing associations exceeding (i) deposits paid to the tentant housing associations and actually received (taking into account any reductions compared to what is stated in the relevant financial plan) and (ii) the amount of granted mortgage loans received (taking into account any changes in size of any granted mortgage loan made compared to what is stated in the relevant financial plan), will be written-off by Entreprenad.

Operational financing of the Company 

The Shareholders shall use their reasonable best efforts to finance or procure the receipt of financing for the Company’s and its subsidiaries’ operational needs for a time period of at least six (6) months after finalisation of the company reorganisation in order to avoid insolvency of the Company and its subsidiaries during the relevant time period.

Amendments to the terms and conditions of the Bonds 

The terms and conditions of the Bonds shall be amended as follows.

Mandatory amortisation: provided that any Bonds remain outstanding at such time, the mandatory amortisation triggered if the Company doesn’t raise no less than SEK 50 million in new common equity by way of cash payment by no later than 31 August 2020, shall be postponed one (1) year so that the relevant dates for amortisation and cash equity injection shall be 31 August 2021.

Redemption and Repurchase of the Bonds: thewrite-off contemplated by the Term Sheet, as summarised under “Debt write-down/conversion of the loan granted under the terms of the Bonds and conversion of preferential shares class A” above, to be constituting voluntary total redemption or voluntary partial redemption (as applicable and subject to conditions set out under that paragraph above).

Disposal of Assets: Disposal of assets to NewCo as contemplated by the Term Sheet shall be permitted.

Events of Default: the reorganisation and debt composition as contemplated under the Term Sheet shall not constitute events of default. 

Governance and resource and information allocation

During the reorganisation a certain team comprising of representatives of a syndication of certain bondholder will be responsible for project management of the restructuring process, negotiations, settlement and financial planning and calculations in connection with the restructuring as well as managing the Brandholmen projects and certain other tasks in connection therewith. The shareholders, together and in smaller team for certain tasks, will be responsible for, inter alia, operational management and administration of the Company and Entreprenad as well as legal representatives and responsible for securing financing and provide necessary information for purposes of successfully complete the debt composition and the transactions contemplated by the Term Sheet.

Conditionalities 

The implementation of the transactions contemplated by the Term Sheet will be conditional upon several events occurring which are outside of the Control of the Company.

Required consents 

The debt composition as a result of the company reorganisation of Entreprenad pursuant to the Term Sheet will, in addition to the approval of a court of general jurisdiction ordering the commencement of proceedings for judicial composition and the appointment and subsequent approval of, and as put forth by, the appointed reconstruction administrator, ultimately require the consent of (i) holders of 75 per cent. of the total capital amount of all claims by creditors of Entreprenad and (ii) 75 per cent. of the voting creditors of Entreprenad. The restructuring of the Bonds pursuant to the Term Sheet will ultimately require the consent of 66 (2/3) per cent. of the adjusted nominal amount of Bonds voted for and that holders of Bonds representing more than 50 per cent. of the adjusted nominal amount participate in the voting.

Undertakings from shareholders and holders of Bonds 

The shareholders (representing ca. 63 per cent. of the outstanding shares and ca. 50 per cent. of the votes in the Company) and holders of Bonds (representing ca.46.7 per cent. of the outstanding Bonds) who are parties to the Term Sheet have agreed to support the contemplated restructuring of the Bonds and a company reorganisation of Entreprenad.

Written procedure 

The Company will issue notices for a written procedure.

Preliminary time plan 

It is envisaged that the contemplated restructuring of the Bonds and a company reorganisation of Entreprenad pursuant to the Term Sheet shall be finalised by no later than 31 December 2019.

For further information, please contact: 

Bertil Rydevik, acting CEO
Telephone: +46763145985
Email: bertil.rydevik@byggabostader.se 

Johannes Bertorp, Restructuring Team and representing the Term Sheet Bondholders
Telephone: +46701880000
Email: johannes@bertorp.se 

This information is information that CHR Bygga Bostäder Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 13:10 CET on 22 July 2019.