Omnia Bonds II announces default, proposed windup of 6½%, 7¼% notes

By Sarah Lizee

Olympia, Wash., June 8 – Omnia Bonds II plc declared an event of default on its series 2018-F2 6½% secured notes due 2023 (ISIN: GB00BFM7CV87) and its series 2017-F1 7¼% secured notes due 2022 (ISIN: GB00BF1SSQ94) and is proposing to wind up the notes, according to two London Stock Exchange notices.

There was about $2.8 million outstanding on the notes due 2022 and about €8.39 million outstanding on the notes due 2023 at maturity.

As previously reported, the issuer has repeatedly failed to make interest payments on the notes.

Omnia said that in each instance, the non-payment was due to not receiving payments from a borrower under certain facility agreements, under which proceeds of the notes had been advanced.

More recently, the issuer failed to make the payment of principal due to noteholders on the maturity dates for both series.

As of June 8, there was $922,796.26 and €2.51 million in interest and expenses outstanding on the 2022 and 2023 notes, respectively, in addition to the outstanding principal amounts.

The facility agreements

Omnia Bonds has lent the net proceeds of the notes to Omnia Private Equity AG (OPE) under the loan and guarantee agreement dated May 31, 2017 between the parties.

As of June 8, amounts due under the facility agreements totaled about $6.75 million and €16.03 million.

Liquidation

In April 2019, OPE was placed into liquidation and responsibility for the liquidation was assumed by the Bankruptcy Office in the Canton of Zug.

The auditors of OPE, PricewaterhouseCoopers AG of Zurich, resigned.

The objective of the bankruptcy office in administering the bankruptcy proceedings is to wind up OPE and settle creditor claims.

On Feb. 17, 2022, Omnia Bonds made a filing with the bankruptcy office to claim amounts owed by OPE, but there have been no updates from the bankruptcy office since the date of the filing.

Artworks

Under the facility agreements, Omnia Bonds was granted security interests that include pledges of certain artwork, including the Portrait de Dora Maar by Pablo Picasso dated 1955, which at the time of entry into the asset pledge was estimated to have a value of €5 million, and 255 bronze sculptures by Auguste Rodin, which at the time of entry into the asset pledge was estimated to have a value of €23.46 million.

If instructed by noteholders, Omnia Bonds may be able to take steps to investigate the location and status of the artwork and determine suitably qualified advisers and the costs for doing so.

Delisting and exchange offer

On April 6, Omnia Bonds delisted both series of notes from the Frankfurt Stock Exchange.

In connection with the delisting, an exchange offer was proposed to be undertaken whereby the noteholders consent to redemption of the notes in exchange for and in consideration of an issuance of equity securities arranged by the principal of OPE comprising shares in a fund holding real estate assets which would be listed on a regulated stock exchange.

As of Thursday, Omnia Bonds has not received a final proposal as to the terms of an exchange offer.

As a creditor of OPE, any recoveries made by Omnia Bonds through the administration of OPE or the enforcement of any security will be distributed to holders of the notes, in line with certain conditions.

It is not known when distributions may be made or how much will be recovered by the Omnia Bonds.

Omnia Bonds’ assets

The issuer’s assets include its rights under the facility agreements and related security documents, and reserves held in respect of each series of notes.

All amounts held or recovered in respect of the notes are applied in the following order of priority:

• First, for costs and indemnity payments, if any, payable to trustee Truva Services or any potential receiver;

• Second, for costs and indemnity payments, if any, and any other amounts payable to the servicer or the registrar;

• Third, in or towards payment of all principal and unpaid interest on the notes; and

• Fourth, the balance, if any, in payment to Omnia Bonds.

The issuer said that as of Thursday, no specific instructions had been received from holders of the notes.

Trustee notice

The trustee has given written notice to the issuer declaring the notes to be immediately due and payable.

For both series, the trustee is not bound to exercise its discretion or institute any proceedings, steps or action unless: it has been requested in writing by noteholders holding at least one quarter of the total principal amount of the outstanding notes or has been directed by an extraordinary resolution; and the trustee has been indemnified, secured or pre-funded to its satisfaction.

As of Thursday, no request has been made of the trustee.

Noteholder meetings

For each series, the trust deeds contain provisions for convening noteholder meetings to consider matters relating to the notes, including the modification of any provision of the conditions.

Any modification may be made if sanctioned by an extraordinary resolution.

A meeting may be convened by the issuer or by the trustee and will be convened by the trustee upon the request in writing of noteholders holding at least one-tenth of the total principal amount of the respective series.

For each series, the quorum at any meeting convened to vote on an extraordinary resolution is one or more persons holding or representing one more than half of the total principal amount of the outstanding notes, or, at any adjourned meeting, one or more persons being or representing noteholders whatever the principal amount of the notes held or represented.

Reserved matters defined in the trust deed may only be sanctioned by an extraordinary resolution passed at a meeting of noteholders at which one or more persons holding or representing at least three quarters or, at any adjourned meeting, one quarter of the total principal amount of the relevant notes form a quorum.

Any extraordinary resolution at a meeting for a series of notes will be binding on all holders of those notes, whether present or not.

Shortfall and termination

As of June 8, no noteholder has directed the trustee to institute any proceedings, steps or action, and no request has been received from a noteholder to convene a meeting.

Subject to any prior instructions from noteholders in line with the trust deed, the issuer will convene a noteholder meeting on Sept. 21 to determine what action noteholders require the issuer to take in relation to the event of default.

Noteholders are required to provide any instructions to the issuer or the trustee by no later than July 31.

In the absence of any instructions at a noteholder meeting, the issuer will declare that unpaid amounts due under the notes constitute a shortfall to be borne by noteholders.

The issuer will distribute any amounts held in respect of the notes in line with the order of priority and will then proceed to terminate the program documents.

Contact information

Omnia Bonds said noteholders who have questions should make themselves known to the issuer or the trustee, arrange for their position in the notes to be disclosed to the issuer or trustee, and verify their holdings of the notes to the issuer or trustee.

Noteholders may contact the issuer by sending an email to dealing@omnia-bonds.com referencing the ISIN of the notes and “Omnia Bonds II plc” in the subject line of the email.

The issuer is a London-based investment holding company.

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