(Bloomberg) -- German landlord Adler Group SA is looking to refinance senior debt it took out as part of a restructuring earlier this year in an effort to lower its servicing costs.
Adler is looking at a number of options to reduce the cost of its first lien debt, including using proceeds from asset sales to repay part of it, according to people familiar with the plans. It has also approached investors to refinance some debt at a lower rate, the people said, asking not to be identified because the information is private.
Talks about Adler’s options are at preliminary stages and might not lead to a deal. A spokesperson for the landlord declined to comment.
Adler reached an agreement with a majority of bondholders in May to refinance debt and boost liquidity, after the landlord struggled to raise sufficient cash through property sales. Its second debt overhaul in the past two years bought the landlord time, but in an environment where interest rates are falling, the cost of its debt looks expensive.
As part of the restructuring, the German company extended debt maturities, converted second-lien notes into subordinated perpetual notes and pulled in fresh money by increasing its first-lien debt. That debt, which accrues payment-in-kind amounts at a rate of 12.5% a year, stood at €1.1 billion, the people said.
Repaying or refinancing are options Adler is looking at, according to the people. Adler can redeem its debt early at face value without having to pay any premium to investors, according to the debt documents.
The real estate company has been under pressure since short seller Viceroy Research accused it of fraud more than three years ago, allegations the firm has strongly rejected. In the wake of the report, Adler struggled to find an auditor to take on the job of checking its books. It named one about a year ago.
Adler last month published consolidated financial statements and annual accounts for the years ending 2022 and 2023. It also named Thorsten Arsan as new finance chief.
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