Consensual approach fails despite support from all noteholder classes

CMBS investors and advisers have closely watched the conduct of the Uni-Invest restructuring and its outcome. Peter Hansell, head of property at Cairn Capital, said: “We were very pleased with the very high level of engagement of the noteholders across the entire capital structure.” As expected, the class B, C and D noteholders all voted for the Valad consensual proposal, which would have given them  hope of salvaging some value.

But a significant number of class As also voted for Valad, some of whom were likely to have also had subordinate class bonds. The vote for Valad by this class was believed  to be between 25% and 50% – but a 75% majority was needed. Valad Europe chief executive officer Marty McCarthy said the company was disappointed not to have secured the A note-holders’ 75% threshold.

He said: “We are grateful to the A noteholders for having selected Valad Europe as their preferred asset manager for the consensual restructure option. We continue to believe that consensual restructuring of future CMBS defaults offers a credible alternative to investors who wish to retain control after restructuring, while allowing the value of their underlying asset collateral to be maximised and disposed of in an orderly way.”

Hansell said: “Giving note-holders a choice was a huge positive. The Valad proposal was certainly not dismissed out of hand, but 75% is a very high hurdle. We asked ourselves many times: would the consensual option trump a 40% pay down?”