ESPG asks bondholders to vote on suspension of total LTV covenant

By Marisa Wong

Los Angeles, Feb. 16 – ESPG AG is requesting the holders of its 2018/2026 bonds to vote in a resolution without a bondholders’ meeting, according to a Friday press release. The company is seeking approval of a suspension of the bonds’ total LTV covenant.

The company may have breached its obligation under the terms and conditions of the bonds to ensure that the total LTV of the ESPG group on a consolidated basis does not exceed the total LTV within the meaning of the terms and conditions of the bonds on any reporting date. The relevant comparative value is set at 75% as of Dec. 31, 2023, 70% as of Dec. 31, 2024 and 65% as of Dec. 31, 2025.

According to currently available, but still preliminary, valuation and calculation bases, the company’s management board assumes that the total LTV as of Dec. 31, 2023 was 74.3% and that the total LTV covenant was therefore met. However, because this preliminary value is only just below the relevant comparative value and changes or adjustments to the valuation and calculation bases may still be made during the audit of the financial statements, it cannot rule out that the comparative value of 75% as Dec. 31 will ultimately be exceeded.

As a precautionary measure, the management board has therefore decided to ask the bondholders to approve the suspension of the total LTV covenant as of the Dec. 31 reporting date.

In addition to the suspension of the total LTV covenant as of Dec. 31, the company is also proposing to grant the joint representative of the bondholders the authority to approve a (renewed) suspension of the total LTV covenant vis-à-vis the issuer for 2024 and 2025 if necessary.

The company is also asking bondholders to approve, as a protective measure, a possible increase in the volume of the bond by 20% of the currently outstanding total nominal amount at a price of at least 95% of par in order to provide the company with financial flexibility.

The vote without a meeting will take place from March 18 to March 20.

A corresponding invitation to bondholders to cast their votes is expected to be published on the company’s website on Feb. 19.

The invitation to vote will also contain proposals by the issuer for further amendments to the terms and conditions of the bonds.

ESPG is a real estate agency based in Cologne, Germany.

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