Sweden's SBB creditors swap $158 mn debt for residential bonds

01 Jul 2024 CW Team

Creditors of Swedish real estate firm SBB have agreed to swap a portion of its debt for bonds in a residential property unit as part of the group's on-going restructuring efforts. This move follows the election of a new board chair.

SBB has been at the centre of a Swedish property market bubble that started to burst in 2022 due to soaring inflation and interest rates, leading to significant cuts in its credit ratings and a sharp decline in its share price. The debt swap was executed at a substantial discount, allowing the group to record a gain in equity of 1.8 billion Swedish crowns, according to CEO Leiv Synnes.

The debt, which creditors agreed to exchange for new bonds in the residential unit and some cash, was originally valued at 3.9 billion Swedish crowns. At the end of March, the loss-making SBB had net debts totaling approximately 56 billion crowns. Creditors exchanged $157.5 million worth of debt for bonds in SBB's residential unit Sveafastigheter, preparing the subsidiary for an initial public offering or stake sale. "This is the last major step to get Sveafastigheter ready for capital raising," Synnes said.

On the same day, shareholders elected Lennart Sten as SBB's new board chair, despite proxy advisers' recommendations to reject his candidacy. Sten, who was a senior adviser to the SBB board, replaces Lennart Schuss, who had been chair since 2017. Proxy advisers Institutional Shareholder Services and Glass Lewis had advised shareholders to vote against Sten's appointment, citing concerns that he might hold too many board positions.

Sten assured the annual general meeting that he has sufficient time to fulfil his role as board chair. Sweden's Aktiespararna shareholders association voted in favour of the new board after raising questions to the outgoing board during the meeting. (Source: ET & Reuters)

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