Yesterday, DEMIRE released an ad-hoc stating that the company has reached an agreement with a group of bondholders (ad-hoc group), who represent the majority of the outstanding principal amount of the bond (€ 499m). It is aimed to close the agreement as soon as possible. Here are the key components of the agreement:

• DEMIRE will perform a partial redemption of the bond at par to the tune of € 49.9m.
• The maturity of the bond will be extended until 31 December 2027 at an increased 5% annual cash interest (prior: 1.875%) with an additional 1% PIK interest starting on 1 January 2027.
• Moreover, it is currently intended that shortly after the early redemption of the € 49.9m, DEMIRE will launch a tender offer to all holders of the bond to repurchase a maximum of € 209.3m of the remaining principal at a maximum price of 76.25%. There are already backstop commitments provided by members of the ad-hoc group for a large part of the maximum amount. DEMIRE will pay all bondholders who participate in the backstop a fee of 5%. The total discount at full utilization would hence amount to € 39.3m.
• In order to finance this, DEMIRE’s majority shareholder Apollo agreed to grant a shareholder loan of maximum € 100m but at least € 68.3m, which will be provided at arms’ length terms. The remainder of the required funds will be provided by DEMIRE’s existing cash funds.
• On top of this, Apollo has undertaken measures allowing DEMIRE to free up additional liquidity, which is currently allocated to the development of certain property companies (up to € 120m). This could include a transfer of the respective entities into an entity controlled by Apollo.  
• The company also provided an asset disposal program comprising 17 assets (incl. LogPark) which should generate total net proceeds of € 220m (8% discount assumption) until 2026.  

While it is most certainly good news that DEMIRE finally solved its refinancing issue, the agreement represents a great burden to the operating business of the company for the years to come.

We hence reiterate to HOLD at an unchanged PT of € 1.20 and further keep our estimates unchanged until the closing of the agreement.