REC Plantation Place again denied waiver from class B noteholders

By Angela McDaniels

Tacoma, Wash., Jan. 31 - REC Plantation Place Ltd.'s second attempt to secure a waiver from the holders of its £51.5 million class B notes failed, according to a company news release.

The noteholders met on Jan. 31 in order to vote on an extraordinary resolution concerning the waiver. Of the noteholders represented at the meeting, 73.75% voted in favor of the resolution. This fell just short of three-quarters of the votes needed in order for the waiver to be granted.

As previously reported, the company held a series of meetings on Dec. 23 for the holders of its five series of secured floating-rate notes due 2016.

The 75% threshold was met at the meetings for the holders of REC's £380 million class A notes, £58 million class C notes, £51.1 million class D notes and £19 million class E notes.

It was not met, however, at the class B noteholder meeting, so the company convened the second meeting on Jan. 31. At the first meeting, holders of 73.8% of these notes voted in favor of the resolution.

REC Plantation Place is a commercial mortgage-backed securities deal backed by a London office building. A reduction in the value of the property has resulted in the ratio of the loan amount to the property value exceeding the loan-to-value ratio covenant level of 82.14%. The ratio has exceeded this limit since July 2008.

The waiver would waive the current and any future loan-to-value event of default for 22 months from the date of the waiver until either Oct. 25, 2012 or the date on which the property is sold. Once the property is sold, the company will use the proceeds to pay down debt.

If the property is sold by Oct. 25, 2011, noteholders who voted in favor of the waiver will receive a waiver fee of 0.25% of par. If the property is sold between Oct. 25, 2011 and the end of the waiver period, the waiver fee will be 0.5% of par.

Noteholder group formed

As reported on Jan. 19, the company received notice that an ad hoc group of the noteholders will oppose any enforcement action taken against the company due to the event of default.

The group represents more than 25% of each class of the company's notes and its junior lender, Lloyds TSB Bank plc. This means it holds enough notes to block any proposal that requires an extraordinary resolution to be sanctioned, according to a notice to bondholders.

The ad hoc noteholder group said the company's proposal to sell the property or some of the units and use the proceeds to pay down debt represents the "most attractive and cost-effective solution available to noteholders."

The group is supportive of the proposal and said it will oppose any proposal that involves the sale of the issuer's debt to another entity, any form of credit bid by holders of the notes or the junior loan or any other proposal that would result in a sale of the property or units other than through a full and open sales process.

The consent solicitation agent for the meetings was Brookland Partners LLP (44 0 20 7652 9664 or 44 0 20 7652 9661). The tabulation agent was Bondholder Communications Group (+44 0 20 7382 4580).

The issuer is based in St. Helier on the Channel Island of Jersey.

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