Having worked solidly on a financial restructuring since the autumn, we are delighted to have successfully closed a financial restructuring on behalf of the Soroya Family.

Ellandi worked very closely with the family, its existing bankers and a new senior lender to structure, fund and close a simultaneous restructuring and refinancing.

The deal saw HSBC provide a new £16.6m loan facility secured on a portfolio of hotels and retail assets. The proceeds of this loan were used to partially refinance the existing senior lender who also made available a new subordinated loan facility. The new financial structure will significantly reduce the borrowers funding costs, make free cash flow available for refurbishment of their hotel portfolio and replaces maturing loans with new term loan facilities. Furthermore, this was achieved without the need for the borrower to commit significant additional equity.

Ellandi acted as restructuring adviser to the Soroya family and were able to work closely with the banks and their advisers to achieve a restructuring that worked for all parties.

Ellandi and K&L Gates hosted a restructuring lunch on 20th November. The objective was to create a forum for discussion in regards to how banks should approach distressed property loans. We were delighted to be joined by representatives of Barclays Capital, Bank of Ireland, Houlihan Lokey, National Australia Bank, Nationwide and Grant Thornton.

There was wide ranging and at times passionate debate but the general conclusion was that there is very little consensus between banks. Some organisations are taking a proactive stance and looking to enforce covenants whilst others are willing to show patience to borrowers providing that interest is serviced. Some banks view LTV as a “technical default” that can be waived whilst others take the view it is a key contractual term that must be enforced. Certain people thought that the loan servicer model applied in the CMBS market is a robust structure whilst others argued it was incapable of making decisions and would lead to paralysis following a loan default.

The only universal opinion was that we are in uncharted waters and that 2009 will be see the banking and property industries having to learn how to cope with major challenges and a new environment. Although, it seems that lenders will address these issues in very different ways.

Ellandi has completed a financial review of a major developer that operates in the high end residential market.

The business, with assets of £180m, brought in Ellandi as a consultant to undertake an emergency analysis of its liquidity position. It feared it would shortly be unable to meet its debt obligations, as sales volumes and asset prices fell during H2 2008.

Ellandi worked intensivle to review the business’ cashflows, future projections and ongoing liabilities. We were then able to provide strategic advice in regards to how the business should operate in order to conserve cash and access new funds. This enabled the company to approach its banks with a comprehensive restructuring proposal that were supported by a disparate group of banks.