S&P puts Adler on watch

S&P said it placed its Adler Real Estate AG’s ratings on CreditWatch with developing implications.

Adler announced the prepayment of all outstanding bonds of its fully owned subsidiary ADO Group at par plus accrued interest (about €310 million in total). This follows the bondholders’ vote for immediate repayment, due to their expectation that they will not have the same level of recourse to the equity value and cash flows of ADO Properties following the planned merger between Adler and ADO Properties. ADO Group is currently fully consolidating ADO Properties in its financial statements, and this was also the basis of the bond documentation at the time of the issuance.

The repayment is expected to be settled by Monday, which Adler’s funding needs for the overall transaction have increased, and S&P did not anticipate an immediate repayment of ADO Group bonds in its previous analysis.

“We believe there is an increasing risk, in particular regarding consistency of the company’s strategy for the transaction’s execution, its relationship management with stakeholders, and unexpected events that could affect its financial performance and overall creditworthiness,” said S&P in a press release. The agency expects to resolve the CreditWatch placement with three months.

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