Kaupthing Bank Sverige AB has foreclosed its lien on shares of the Swedish subsidiaries of PMS Group Ltd. (TASE:PMGR). The lien was granted to guarantee a bank loan for the financing of the company's Free Harbor project.
The bank demanded immediate repayment of all outstanding credit.
Kaupthing Bank Sverige notified PMS that it estimates the value of the foreclosed assets at 800 million krona (about NIS 400 million), which it will use to offset part of the 1.13 billion krona (NIS 566 million) loan to the company. PMS says that the value of the assets was NIS 1.38 billion krona (NIS 715 million) at the end of September.
In its notice to the TASE, PMS said that the cash flow from the rental revenue from its Swedish properties is its only source of revenue for repaying its debts, including on its bonds.
PMS was founded in 2005 to buy and lease income-producing properties. The company bought 13 properties by the end of 2007 with a total leasable area of 153,000 square meters.
PMS's Swedish subsidiaries said that as a result of the foreclosure, it will not be able to meet its obligations, including the interest payment on its bonds, which are traded at a yield of 91.2%. The company faces heavy financing costs to the banks, which have priority over the bondholders. Most of the Swedish properties bought were financed with a NIS 650 million loan from Kaupthing Bank Sverige. A small part of the money was raised in a stock and bond issue in 2007.
The authorities in Stockholm will now appoint an external assessor to value the foreclosed assets. If they are valued at over 800 million krona, the additional amount will used to offset the outstanding loan balance.
Kaupthing Bank Sverige is a unit of Iceland's Kaupthing Bank hf, which was granted a moratorium by the District Court of Reykjavik in November. That moratorium covers the bank's assets in Europe, and it is seeking similar recognition of the moratorium in the US. The bank is seeking to protect its assets in order to restructure and wind up its credit institutions to repay its creditors.
Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2008
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