Short cuts: IVG, KPN, ThyssenKrupp


Friday night or Saturday is always a good time for another “breaking” news item about the IVG restructuring. This time they came out with an outline of the restructuring plan.

As expected, equity and hybrid capital are effectively wiped out. What I found highly surprising however is this part:

Further, it is, inter alia, envisaged that SynLoan I and the convertible bond will both be transferred to the company by way of a contribution in kind with 100% of their respective face amounts (so-called debt-to-equity swap), which would lead to a quota-ratio of these two creditor groups’ share in the stated share capital of 80% (SynLoan I) to 20% (convertible bond).

This is a great surprise that although collateralized, the Syn loan I is treated “pari passu” with the convertible. I do not fully understand this, but maybe the collateralization has happened to late (and too close to potential bankruptcy) and would have been invalid in case of bankruptcy. This explains the price jump in the convertible this morning I guess.

As usual in such cases, I am surprised that the equity is still valued at 35 mn EUR.


Interesting development at KPN: After KPN decided to sell its German Eplus subsidiary, Carlos Slim canceled the “stand still” agreement and is now bidding for KPN. I think this will be interesting to watch, as KPN surely doesn’t want to be acquired. I am pretty sure, they will come up with some defences like poison pills etc. Nevertheless I clearly sold out too early . I think I underestimated the “calros Slim” angle here.


ThyssenKrupp might be an interestign “special situation in the making”. Last week, Berthold Beitz, the 99 year old industrialist who efefctively controlled ThyssenKrupp via the Krupp foundation, passed away. Rumours about an accelerated capital increase are emerging.

It is interesting to see in the shareholder structure that a lot of German inevstors got out (Deka, Union) and Anglos Saxon investors got in in the last few months. This could become really interesting.


  • @MMI: Great research and prediction by the way….You saw the ESUG coming and here it is….

  • Regarding Carlos Slim bit fpr KPN:
    an interesting situation of uncertainty might occur..


  • Finally, they made it. It´ll be interesting to see what will happen next under the ESUG procedure. The wording on IVG´s website sounds as if the hybrid holders couldn´t be convinced to agree to the proposed deal. Good for senior creditors, bad for shareholders, but nothing really surprising. I haven´t seen any news that the issuer of the convertible (ING Finance B.V.) also seeks creditor protection. Watch out for more news….

  • IVG: why should Hybrid owners and shareholders accept this? they can veto the proposal, and they should. The other creditor classes negotiated, while the Hybrid was not invited. the Hybrid should make a counter offer, which is fair, e.g. a haircut of 50-60% and interest waiver, The remaining “New Hybrid” does not affect the creditworthiness of the restructured IVG (as there is no repayment and, as long as there are no dividends, no interest), and affects only minimally the value of the new shares.
    If the Hybrid says no, the value of the assets in a non-going concern case will fall maybe 5-10%, which is 250-500 million, while the agreement of all creditors to a fair solution only costs them (at 60% haircut) a nominal 40%x400=160 million (which in market value terms might only be a 60-80 million).
    Why should the Hybrid allow the others to get all, leaving themselves with nothing, if they have a still significant destruction potential (see IVG’s ad hoc, detailing the residual values for other creditors in case of insolvency, with the convertible at 27% or just a bit more, instead of the 100% they try to get now). It is far better for the unsecured seniors (convertible and Synloan 1) to give in a tiny bit on the Hybrid in order to save the lion’s share of their own post-restructuring value.

    • nope, I still think (and always thought) the Hybrid is screwed. If they don’t accept, they will most likely get nothing in the ESUG process.

      With the new ESUG procedure, bancruptcy is not such an issue for an asset rich company lie IVG.


  • I’m not sure have you noticed (probably have?) that Martin Whitman from Third Point has position in the IVG convertible. Just skimmed through their shareholder letters and he had something to say about them. Just decided to comment in case you haven’t noticed. If you have – carry on :).

  • Why do you think you sold KPN too early? As far as I understood, your reasoning was to capture some inefficiency during the trading period. Holding KPN longer had required a change of strategy. So the sell was consequent. Nobody could have known that Carlos Slim was going to bid for KPN. Holding it longer and make the gain had been pure luck.

    BTW can you have a look on Albemarle & Bond Holdings and tell me what the issue with the company is. Apparently it is extreme undervalued.

  • Hi mmi,

    Für mich wäre interessant zu wissen:
    wie bewertest du die “Flucht der Deutschen” und den einstieg der Angelsachsen?

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