Thursday, September 6, 2012

Homburg Invest Restructuring Plan Holds Little For Shareholders


Thu., September 6, 2012
Homburg Invest Inc. shareholders may not get a dime following the restructuring of the troubled Halifax-based real estate company, according to new documents, The Chronicle Herald reported. Last October, the debt-plagued company went to court to obtain protection under the Companies’ Creditors Arrangement Act, while Deloitte, the court-appointed monitor, restructured its affairs. The company’s management discussion and analysis sheds some light on what a restructuring means to Homburg and its investors. “In light of the CCAA proceedings, it is unlikely that (Homburg Invest Inc.’s) existing Class A and Class B shares will have any material value in, and following approval of, a restructuring plan of arrangement, and there is a significant risk such shares would be cancelled,” the company said in documents filed with Canadian securities regulators on Aug. 31. Failure to successfully restructure the company leads to a different range of troubles. In that case, according to Homburg management, “substantially all of its debt obligations will become due and payable immediately, or subject to immediate acceleration, which would in all likelihood lead to the liquidation of the applicant’s assets.” As of June 30, 2012, the company claimed assets of $1.5 billion and total long-term debt of $939 million. But, the document also noted that, to date, creditors have about $2.1 billion in claims against the company. So far, Deloitte has deemed $808 million of those legitimate. That figure could grow as Deloitte adjudicates more of the claims, although the company said that it wasn’t aware of any additional claims not in the $2.1 billion total.

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