JR Global REIT proposes full repayment by 2029; creditor approval is the 'wild card' [fn Market Watch]

[Financial News]  JR Global REIT, facing a liquidity crisis, will pursue debt restructuring on the condition that it repay creditors all principal and interest by the end of 2029. It is seeking to normalize its operations through the Autonomous Restructuring Support (ARS) program rather than court-led rehabilitation proceedings, with an extension of the lease at Belgium's Finance Tower and successful refinancing seen as key variables.
According to investment banking (IB) industry sources on the 20th, JR Global REIT will hold a bondholders' meeting on Nov. 23 at the Kyowon Jonggak Building in Jongno-gu, Seoul, for its 3-1, 3-2, 4th and 6th public bond issues. The meeting is intended to secure approval for the repayment plan recently finalized by its board.
The repayment plan centers on paying all principal and interest in full by the end of 2029. If the company secures the consent of at least two-thirds of the voting rights represented at the meeting and at least one-third of the total bond amount, and obtains court approval, it will move a step closer to normalization through the ARS program.
The key issue is cash flow from overseas real estate. The company plans to pursue refinancing based on an extension of the lease at Belgium's Finance Tower and secure funds for repayment in stages. However, as the lease extension has not been finalized, its capacity to repay may vary depending on the size of the refinancing and the financing terms.
The company is seeking to avoid rehabilitation proceedings out of concern that they could erode asset values. It believes that if the proceedings gain momentum, the risk of the local lender consortium enforcing its security rights and the risk of asset sales could increase. It also plans to suspend shareholder dividends until debt repayment is complete.
Oh Nam-su, CEO of JR Global REIT, emphasized, “The current difficulties stem from a liquidity problem caused by a mismatch between the maturities of financial liabilities and the timing of cash flows,” adding, “We will repay all debt and interest in full by the end of 2029.”
Meanwhile, the real estate IB industry views this debt restructuring as a way to secure the time needed for overseas property values to recover. Analysts say creditors must weigh the potential losses from early recovery against the uncertainty of recovering their money after holding the bonds for the long term.
The real estate investment industry also said that the actual refinancing amount and interest rate terms after the lease extension will determine the company's ability to repay its bonds. An industry source added, “Ultimately, concrete cash-flow and financing plans to back up the promise of full repayment are expected to be the key criteria creditors use in deciding whether to consent.” 


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