Becton needs debt waivers to survive

25/02/13 7:10 AM

Becton needs debt waivers to survive

PUBLISHED: 25 Feb 2013 PRINT EDITION: 25 Feb 2013 Gift Article: 100

The company said in a statement on Friday... A trading halt is being sought in relation to discussions with Becton's corporate debt provider relating to waivers and consents under the corporate debt facility. Photo: Jessica Shapiro Nick Lenaghan Becton Property Group is teetering on the brink of collapse as its new lending consortium, led by Goldman Sachs, holds out on granting vital debt waivers. The market minnow with the strong property brand is desperately trying to win its lenders support in order to get its December 31 interim accounts signed off this week. Becton is a shadow of its former self but controls $1 billion worth of viable residential projects in Sydney and a strong retirement village business. KEY POINTS Becton Property Group has gone into a trading halt. The developer has forecast a first-half loss and covenant breaches. There are warnings a receivership could damage its developments.

Led by chief executive Matthew Chun, the company hoped its four-year long recovery from the financial crisis was finally nearing success. But the dynamic has shifted abruptly in recent months. First, a trio of major investors Mariner, Telopea and Titanium joined the register, each with different motivations. Then just after Christmas, beleaguered British lender BOS International finally traded its $240 million exposure in Becton in corporate and project debt, to the Goldman Sachs- Fortress Investment Group consortium at a considerable haircut. Since then, the two ends of the capital stack the debt holders and the equity investors have been at loggerheads for control of the company. Now the tussle appears to have moved into the end game, with the companys announcement late last Friday that it was putting its stock into a trading halt. A trading halt is being sought in relation to discussions with Bectons corporate debt provider relating to waivers and consents under the corporate debt facility, the company said.

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Becton needs debt waivers to survive

25/02/13 7:10 AM

The notice is the first public signal that tripartite negotiations between management, the lending group and the major investors have broken down. If no solution is found before February 28 , the deadline for Bectons first-half result, the company faces the prospect of administration, followed by receivership. At stake is a $665 million urban regeneration project at Bonnyrigg, west of Sydney, which mixes private dwellings with social housing in the same way Becton did successfully in its Kensington development in Melbourne. There is also a $414 million mixed-use project in the inner-Sydney suburb of Waterloo, where $103 million in settlements are forecast this year, and the retirement business, which Becton holds jointly with an Omani fund. Becton forecast two weeks ago its property impairments would push it into a first-half loss and potentially trigger debt covenant breaches. Under its previous corporate banker, those waivers had been granted, but the new lenders could seize the opportunity to get control over the business. As the situation deteriorated on Friday, Telopea pulled its director, Andrew Kerr, from the board. Principal Craig Carracher was careful to distinguish Telopeas investment rationale from the stakeholders and said he had regarded Becton as a restructuring opportunity. Weve lost confidence that the opportunity continues for us to turn around the company and to grow it, given we havent received the support of the debt holders. Weve had no engagement with them, he said. Mariners Darren Olney-Fraser also criticised the lenders and warned that the looming receivership could damage Bectons developments and the retirement business. Goldman Sachs declined to comment. The Australian Financial Review

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Click on the links below to create an alert and receive the latest news as it happens Companies Becton Property Grp. People Matthew Chun , Craig Carracher Topics Company News, Financial Markets/Equities Markets, Property - Commercial/Commercial Property, Property - Residential, Property - Commercial/Hotels & Leisure

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