SBB is at the heart of a Swedish property market bubble that first began to burst in 2022. Rising inflation and interest rates led to significant drops in the company's credit ratings and a steep decline in its share price evaluations. This alarming situation has caused considerable financial strain on SBB, reflecting some of the broader challenges in the Swedish property sector. As a result, SBB's creditors have exchanged debt for residential bonds worth $158 million to mitigate risks and stabilize the situation. This move reflects the ongoing volatility and adjustments within the market as it grapples with economic pressures.
Creditors of Swedish real estate company SBB have agreed to exchange some of their debt for bonds in a residential property unit. This move is part of the company's ongoing restructuring, which also included electing a new board chair, the company announced last week. SBB has been at the heart of a property market bubble in Sweden that started to collapse in 2022 when inflation and interest rates surged. This caused significant cuts to its credit ratings and a steep drop in its share price.
The debt swap happened at a significant discount to the original debt amounts. This allowed SBB to record a gain in equity of 1.8 billion Swedish crowns (USD 169.66 million), according to CEO Leiv Synnes, who spoke to Reuters. Creditors agreed to exchange debt worth 3.9 billion Swedish crowns for new bonds in the residential unit Sveafastigheter, as well as some cash. SBB had net debts of around 56 billion crowns by the end of March.
The agreement positions Sveafastigheter for an initial public offering (IPO) or a stake sale, according to Synnes. He emphasized that this final major step is crucial in preparing Sveafastigheter and securing capital for future growth initiatives. On Friday, shareholders also elected Lennart Sten as SBB's new board chair, despite advice from proxy advisers to reject his candidacy. Sten, previously a senior adviser to the SBB board, replaces Lennart Schuss, who had been chair since 2017.
Proxy advisers Institutional Shareholder Services and Glass Lewis recommended against Sten's appointment, arguing he might have too many board positions. However, Sten assured the AGM that he had enough time to serve as board chair.
The Swedish shareholders association Aktiespararna supported the new board following their scrutiny of the outgoing board. Sverre Linton, the chief legal officer at the association, expressed optimism about SBB's potential turnaround moving forward.
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