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ISTAR FINANCIAL INC : SFI debt restructuring could be tricky

15 juil. 201020:07

RLPC-iStar's debt restructuring could be tricky - sources

Financials »

iStar Financial Inc.
5:30pm GMT+0200

Wed Jul 14, 2010 1:01pm EDT
By Jacqueline Poh

July 14 (Reuters) - Commercial real estate lender iStar Financial (SFI.N) is expected to restructure or refinance its roughly $3 billion of debt due next year, banking sources told Thomson Reuters LPC. The company has hired Lazard to advise on the debt restructuring, according to sources.

"Something's definitely coming up, and it would be tricky to try to get this deal done," a source familiar with the matter said.

The company will need 100 percent consent from existing lenders to make any changes to existing credit agreement to accommodate the debt restructuring or refinance, according to LPC data. iStar amended its credit facility in March 2009 to extend $1.695 billion of syndicated loans to June 2011 and add a new $1 billion term loan due June 2012. JP Morgan, Bank of America Merrill Lynch and Citi are leads on the deal.

A few lenders to iStar's syndicated loans have been approached by Lazard, which is said to be gauging the amount of iStar paper traded in the secondary loan market.

"Those who used to own the paper may not do so anymore, and it's hard to tell who still owns the paper when the credit is so actively traded," a source said.

According to LPC's Secondary Market Intelligence (SMi), the average bid-ask price on iStar's second lien loan due June 2011 is 88.95-90.13 as of July 13. The company also has a revolving credit facility due June 2011 currently quoted at 87.55-89.5 and a separate unsecured revolver due 2011 quoted at 78.33-80.33.

Meanwhile, sources pointed out that the company has an additional $2 billion of debt due 2012 in addition to a $500 million paydown needed this September, and some sizable bond maturities over the next two years.

On Monday, Standard & Poor's lowered the company's rating to CCC from B- and cut the senior unsecured debt rating to CCC- from CCC+. The outlook is negative. S&P noted the downgrade was attributable to the company's limited financial flexibility and severe credit quality erosion in its loan portfolio which has negatively weighed on ratings.

S&P added that iStar has the liquidity to negotiate through 2010, but faces adverse headwinds with $3 billion in debt coming due in 2011 and $3.5 billion in 2012. S&P also anticipates some type of debt restructuring in the future which they would perceive the event as a distressed exchange as iStar is likely to extend maturities on its debt and therefore would result in another downgrade to CC.

iStar, a publicly traded finance company focused on the commercial real estate industry, announced that it will release its financial results for the second quarter 2010 on August 3.

(Reporting by Jacqueline Poh, editing by Andrew Hay)


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