Interview with lawyer Daniel Blazek on the planned restructuring of the Noratis bond 2020/25
Question: Mr. Blazek, Noratis AG plans to extend the term of the 2020/25 bond until December 31, 2028 and to introduce an early repayment option for the issuer. What does this measure mean for the investors?
Daniel Blazek: The planned maturity extension and the early repayment option for the issuer are classic restructuring measures that are used in financially stressed situations. For investors, this means that they have to wait longer for the repayment of their capital, which represents an increased risk. At the same time, Noratis AG gets more time to sell its properties at a more favorable time, which could potentially generate better sales prices and thus higher cash inflows. Ideally, this could improve the company’s ability to repay the bond at the end of the extended maturity.
Question: Noratis AG has requested a high participation rate for the bondholders’ meeting on September 10, 2024 in order to have a quorum. How important is participation for the bondholders?
Blazek: Attendance at the bondholders’ meeting is crucial for creditors, especially when it comes to voting on important restructuring measures. If creditors do not attend in sufficient numbers or are represented, the meeting may not have a quorum, which would delay the planned restructuring. This could further burden Noratis AG’s financial situation. It is therefore in the interest of creditors to cast their vote to ensure that their interests are taken into account in the restructuring.
Question: Noratis AG has written down the value of its real estate portfolio by around 31 million euros. How does this affect the position of the bondholders?
Blazek: The write-downs of the real estate portfolio are a clear sign that the value of the collateral that indirectly represents the bond has decreased. This means an increased risk for the bondholders, as the value of the company and thus the security for the repayment of the bond has fallen. The write-downs are also the reason for the planned restructuring measures, as they have had a significant impact on Noratis AG’s results and require an adjustment of the previous business and financing strategy.
Question: What does the adjustment of the annual forecast mean for the financial health of Noratis AG and the future of the bond?
Blazek: The adjustment of the annual forecast, which now assumes a significantly negative EBT and EBIT, shows that Noratis AG expects significant losses this year. This worsens the company’s financial situation and increases the risk that it could have difficulties meeting its obligations. For bondholders, this means that the likelihood of a successful repayment plan decreases if the company cannot stabilize its financial situation.
Question: Noratis AG has pointed out that the market conditions for real estate in Germany remain weak. What impact does this have on the planned restructuring?
Blazek: The weak market conditions make it difficult for Noratis AG to sell real estate at good prices, which affects the company’s liquidity position. Therefore, the planned restructuring is an attempt to give the company more time to wait for better market conditions. However, this also carries the risk that market conditions will not improve as hoped and the company may remain in a strained financial situation for even longer. For bondholders, this means that they may have to wait longer for repayment and uncertainty about the repayment remains.
Question: What advice do you have for bondholders in light of these developments?
Blazek: I advise bondholders to monitor the situation closely and to attend the bondholders’ meeting or be represented. They should thoroughly inform themselves about the proposed measures and critically examine whether the proposed restructuring serves their interests. It might also be useful to seek legal advice in order to better assess the possible consequences of the restructuring. Creditors should be aware that the planned extension of the bond term entails both opportunities and risks.
Question: Thank you for the interview, Mr Blazek.
This interview aims to give investors a clear idea of the impact the planned restructuring of the Noratis bond could have on their investments and what steps they should take to protect their interests.
