Patron and TPG beat Valad Europe to take on Uni-Invest portfolio work-out

Class B, C, and D noteholders are wiped out as class As swing vote for Patron/TPG proposal

Patron Capital and TPG last week finally won the contest to take control of distressed Dutch property company Uni-Invest. After months of work, the pair’s 40% cash upfront offer won over the class A noteholders that controlled the company, beating Valad Europe’s rival bid.

Class A noteholders voted for Patron’s and TPG’s proposal to buy the €359m senior securitised loan secured against the shares in the Dutch company. Uni-Invest carried €603m of outstanding securitised debt against 203 secondary office and industrial properties, which have plunged in value.

The vote wipes out the €243m of subordinated class B, C and D noteholders in the CMBS. The class As voted on 17 April after earlier that day rejecting Valad Europe’s consensual asset management offer, which would have extended the existing CMBS structure for four years while the assets were managed and sold. Class A noteholders will now receive cash from the buyers equal to 40% of the principal outstanding of their notes, plus accrued interest and up to €7.5m to cover some of the expenses around €144m.

They can then opt this week to receive a final further cash payment equal to 35% of the principal amount outstanding for the class As, or new four- year loan notes – effectively 60% loan-to-value stapled finance for the deal, earning 300 basis points over Euribor with payment-in-kind interest of 100bps, to be repaid by asset sales. The Opera Finance (Uni-Invest) CMBS defaulted after reaching legal final maturity in February without repaying.

Patron and TPG had worked on their proposal for over a year. A statement on 17 April said the decision ended a 10-month process, led by special servicer Eurohypo, “which had sought to protect the value of the noteholders’ investment after  efforts to find additional equity were discontinued in June 2011”. Cairn Capital advised Eurohypo. Patron/TPG will be entitled to 48% of the proceeds of each asset sold, as long as it is above a 130% debt allocation under the new loan. The properties will be transferred to a new company.

Eurohypo’s dual track strategy  was drawn up to introduce competition between the credit bid and consensual offer. The result stabilises the assets and avoided the possibility of a third outcome: neither proposal being voted through, leaving what the CMBS fraternity have termed a zombie.