Germany's IVG seeks e300m Berlin guarantee for financing program

Germany's largest listed commercial real estate group, the Bonn-based IVG, is to seek a federal government guarantee for a liquidity program of some e300m as a flanking measure to the restructuring of around e1.3bn in bank debt that it has provisionally put in place.

IVG said an application for the guarantee should have good prospects under Berlin's Economic Programm II (Konjunkturprogramm II), which sets outs to support companies particularly affected in their financing by the impact of the international financial crisis. "We have decided to review the possibilities of drawing on the Economic Programm II," IVG said in a statement. "It could be very effectively introduced as a flanking measure to the liquidity security program already in place." IVG will seek the Berlin guarantee for a program of short-term Commercial Paper that it intends to issue for liquidity management. A company spokesman confirmed that the guarantee sought will be at least e300m. IVG noted the CP market has in practice been closed by the impact of the global crisis, but added that the use of a federal guarantee would allow IVG to once again draw on this important financing element and, "thereby create the requisite financial room for manoeuvre for our operating business."

The global financial crisis caught IVG with a debt load of some e1.3bn and tight liquidity which it has been struggling to restructure. Lack of clarity over strategy caused its major shareholder, Cologne-based private investment bank Sal. Oppenheim, to push out CEO Wolfgang Leichnitz last September and bring in Gerhard Niesslein, former CEO of the DeTe Immobilien property subsidiary of Deutsche Telekom. Niesslein has moved fast to secure extensions of credit lines for the debt, due to expire this year and next "on the basis of term sheets" - which means subject to finding arrangers, and also loan and security documentation. He also cut development and pledged to take IVG back to its roots, being much more transparent for investors. "The focus for the next months is clear .. in eight or nine months' time, we will have done our homework and then we will have a good base to participate in the years 2010 and 2011," he told a news conference recently. pfe (Full story to appear in PFE 124 due to be published on Monday 8 June)