Buyout baron Guy Hands is close to clinching a ¤4.3bn (£3.5bn) debt deal on another investment that has been badly beaten by the financial crisis.
A year after Mr Hands' Terra Firma private equity vehicle lost ownership of The Beatles' music label EMI, he has been forced to come up with a massive refinancing to help salvage his investment in Deutsche Annington Immobilien. This could pave the way for a stock exchange listing that would rake in billions for Mr Hands.
Like EMI, Deutsche Annington, Germany's biggest residential landlord with 190,000 flats, was loaded up with debt. Those loans were due to be repaid or refinanced next year, but a steering committee representing the lenders, which include JP Morgan and Standard Life Investments, have agreed to "amend and extend" the terms.
Mr Hands wants to reduce that debt over the next five years. Previously, he would have tried to refinance the full amount, but the way debt is renewed has changed dramatically since 2007. Such a large number would have been impossible to refinance in current conditions.
However, the proposal would allow Mr Hands to retain a 75 per cent stake in the business, rather than hand over some of his shareholding to the banks for failing to refinance the loans. If the bondholders agree to the proposal, which was sent to them late last week, then it should be agreed by Christmas.
Mr Hands took Citi, which had advised and lent money on the takeover of EMI, to court claiming he had been deceived into overpaying for the business. Terra Firma had already handed over the keys of EMI to Citi over the debt burden and then lost the court case.
Terra Firma recently asked a US appeals court for a new trial. EMI's recorded music operations have since been sold on to Universal Music Group.Reuse content