Fitch: Atrium European outlook stable

Fitch Ratings said it affirmed Atrium European Real Estate Ltd.'s BB- long-term issuer default and senior unsecured ratings and B short-term issuer default rating.

The outlook was revised to stable from negative.

The rating action follows the announcement that existing shareholders Citi Property Investors and Gazit Globe Ltd. will repurchase €428 million out of the outstanding €448 million 10.75% convertible bonds due 2015. The payment will be in the form of 144,853,705 new ordinary shares in Atrium. Atrium will pay also an annual dividend for the first time of €0.12 per share and undertake a partial tender offer for up to €120 million of the 2013 maturity unsecured bonds after the share exchange transaction has been completed.

Fitch believes the transaction, if completed, will be positive for Atrium's remaining bondholders because the new dividend payments will be subordinated to their interest payments, whereas previously convertible bond interest payments ranked equally

Despite projected net interest coverage and leverage improvements, Atrium's reduced available liquidity and continuing development appetite act as restraining factors on the rating, the agency said.

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