Hilleren now ask holders for four-month waiver for two bond issues

By Susanna Moon

Chicago, Dec. 7 – Hilleren Tomteselskap AS is asking holders to extend the maturity date until April 1, 2019 for its 12% senior secured callable bond issue 2016/2017 and 20% junior secured callable bond issue 2016/2017.

The bondholder meeting has been scheduled for Dec. 21 in Oslo.

After the extended maturity date of Dec. 1, 2018, the issuer is now in default and is proposing to extend the issue and to convert all outstanding bonds along with accrued interest to share capital in the issuer, according to a notice by bond trustee Nordic Trustee AS.

Also, interest will accrue but not be payable until maturity.

Under the decision arrived at the meeting held Sept. 11, two members of the bondholder committee have summarized the findings, assessments and recommendations, which include the following:

• A signed and binding letter of intent for the sale of parts of the property to the medical center for an amount of NOK 3 million;

• A confirmation of interest/renewal of the lease contracts that have been entered into with Norgesgmppen, Pizzabakeren and others;

• The issuer will use its best endeavors to prepare an updated planning application that covers part A2 and B of the project (sheltered housing) to be delivered to Bergen municipality;

• A binding offer from DNB or another reputable bank regarding the funding of the project going forward, including terms and conditions for a construction loan;

• A firm commitment from Knut Jorgen Hauge to stay on the Hilleren Tomteselslcap project;

• A shareholders’ agreement on terms satisfactory to the bondholders’ committee, setting out inter alia, dividend, transfer of shares and board composition and more specifically that a majority of the board of directors of Hilleren Tomteselslcap shall comprise of bondholders’ representatives, elected by the bondholders; and

• A limited due diligence of Hilleren Tomteselskap AS and the project with the cost for the due diligence to be paid by the issuer by way of funds deposited to the blocked and pledged account in DNB Bank ASA, serving as security for the outstanding bonds. The cost of the due diligence will be limited to NOK 150,000.

If the proposal is approved, the issuer and the bondholders’ committee along with PricewaterhouseCoopers will examine models for conversion of the bonds to equity, the conversion rates for the senior secured and junior bond issues, respectively, and present a proposal for a conversion model to the bondholders by Feb. 1.

The issuer is also asking holder to approve NOK 150,000 from the restricted cash credited to the escrow account and serve as security for the outstanding bonds to be used for preparation of financial statements and audit of the issuer’s financial statements and for marketing of the project.

For more information, contact the bond trustee at +47 22 87 94 45 or slagsvold@nordictrustee.com or the issuer on +47 411 07 400 or hauge.kj@gmail.com.

To form a quorum, at least half of the bonds had to be represented at the meeting. To pass, holders of at least two-thirds of the bonds represented at the meeting needed to vote in favor of the measure.

Background

As announced Aug. 27, the holders were being asked to accelerate the issues under two proposals considered at a meeting held Sept. 11 in Oslo.

Holders voted at the meeting to approve a waiver and extension of the maturity date until Dec. 1.

Under the second proposal, the issuer would be granted a waiver of the payment default until Dec. 1, which could be withdrawn at any time by the trustee by giving notice to the issuer and the bondholders committee will oversee the following process during the waiver period:

• Assessment of alternative value enhancing actions;

• Explore bondholder alternatives; and

• Negotiate with the issuer regarding a potential conversion of the bond and acquire all relevant information.

For the acceleration, the bonds would have been repaid by enforcing the bond trustee’s security interest over all material assets, including the first priority land mortgage, escrow account pledge, the share pledge and starting the sales process of the land mortgage.

As reported on March 27, the company obtained an extension to June 20 of the maturity date of the two bond issues.

In addition, the bondholders voted to postpone all interest payments until the new maturity date without penalty.

The company also received waivers, access to NOK 1.52 million in restricted cash and bondholder approval to assume a maximum of NOK 3 million in new debt that would rank ahead of the bond issues in priority.

As previously reported, Hilleren has spent all proceeds from the bond issues and is unable to repay the bonds at maturity.

The trustee previously said the actions are designed to allow the company to continue its operations.

Hilleren Tomteselskap is a Bergen, Norway, development and real estate company.

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