Kardan proposes restructuring deal to series A and B debenture holders

By Caroline Salls

Pittsburgh, Dec. 19 – Kardan NV proposed a debt restructuring agreement in principle to the holders of its series A and series B debentures, according to a company news release.

As of Dec. 1, there were NIS 321.99 million of series A debentures outstanding and NIS 998.94 million of series B debentures outstanding.

The proposal was negotiated and agreed upon in principle with the trustees and representatives of the debenture holders.

Under the first phase of the two-phase proposal, the deeds of trust for the series A and series B debentures will be amended to postpone the upcoming February 2015 interest and principal payments by six months until August 2015.

In the second phase, which will start within 90 days of receiving the approval of the debenture holders, the company, trustees and the debenture holders will begin to draft amendments to the deeds of trust that will postpone the majority of payment of principals by 24 months with specified conditions, restrictions and collateral.

According to the proposal, the 24-month postponement excludes principal payments for series B debentures in 2019 and 2020, which will remain intact and will grow as a result of the postponement of the principal payments of this series from 2017 and 2018 to 2019 and 2020.

In addition, the company said a deferred interest payment will be made in August 2015, and Kardan will make an interest payment in February 2016 in relation to the entire outstanding principal at that date for the period from February 2015 until February 2016.

As of the repayment date in February 2015, the interest rate will increase by 1.875% so that the series A debenture principal will carry an interest rate of 6.325% and the series B debenture principal will carry an interest rate of 6.775%.

The debenture holders will be allocated company shares without consideration on the agreement signing date, which will constitute 12% of its issued and paid up capital immediately after the allocation.

Kardan said Kardan Land China Ltd. will guarantee the company’s commitments toward the debenture holders and the trustees. The guarantee will be limited to €100 million and will expire when the relief conditions are met.

Also under the proposal, the company will exercise at least 75% of its indirect rights in KWIG to include a full repayment of shareholders’ loans borrowed from TGA and KLC to the lenders as soon as possible.

The company will agree that the distribution of the net proceeds from the KWIG transaction, as well as from the sale of its indirect rights in Galleria Chengdu will be done in accordance with the proposal terms.

The immediate amendment must be approved by the debenture holders by Dec. 31. The amendment is also subject to approval of the Tel Aviv Stock Exchange.

Kardan, based in Amsterdam, is an investment company focused on real estate, financial services and infrastructure.

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