Canary Wharf Owners Offer Cash Injection To Help Refinance Debt
(Bloomberg) -- Canary Wharf Group’s owners are offering to provide £900 million ($1.1 billion) of new equity to help the property company repay debt — on the condition that bondholders agree to a new layer of secured borrowing.
The company, co-owned by the Qatar Investment Authority and Brookfield Corp., is asking holders of its €300 million bonds due 2026 and its £300 million bonds due 2028 for permission to incur new debt secured on certain assets, according to a statement issued today.
The aim of the new financing, which will be backed by some of Canary Wharf’s retail assets, is to refinance the 2026 notes as well as £350 million of bonds maturing in April. Canary Wharf has said it would roll over the 2028 notes “in due course.”
Canary Wharf to Use Retail Assets to Refinance £350 Million Bond
If investors agree to the new debt, Brookfield will commit in a letter to providing equity funding of £900 million to repay Canary Wharf’s high-yield bonds maturing in 2025, 2026 and 2028, as well as any loans outstanding under its revolving credit facility.
QIA, owned by the Qatar sovereign wealth fund, may sign the equity commitment letter at a later stage, said the statement. If that happens, Brookfield and QIA will commit to provide equity funding of £450 million each.
Moody’s Ratings called the plans “materially credit-positive” because of the “significantly reduced refinancing risk and the new shareholder commitment.” Moody’s anticipates the new £610 million debt facility will fully repay the notes due in April 2025 and 2026 when they mature.
However, the credit rating agency also said that the arrangement means the last remaining note, due in April 2028, “faces refinancing execution risk with a weaker unencumbered asset pool.”
Canary Wharf’s bonds due 2026 led gains, as markets priced in the plans to refinance the notes with the new debt. The notes are set for their biggest rise in a year, quoted 2.9 cents on the day higher at 97.2 cents on the euro, according to data compiled by Bloomberg.
The developer of London’s dockland district has come under pressure from falling property prices as tenants including HSBC Holdings Plc and Clifford Chance LLP are moving to new offices in the City. Job cuts in the financial industry and the shift to more flexible working have added to the uncertainty over long-term demand for office space in the east London outpost.
The debt-consent solicitation expires at 4 p.m. London time on December 3. Solicitation agents are Citigroup Inc. and Deutsche Bank AG.
©2024 Bloomberg L.P.
No comments:
Post a Comment