Adler Draws on Credit Line in Fight With Short-Sellers

08 Nov 2021, 08:03 PM IST

(Bloomberg) --

Adler Group SA has drawn down a 300 million euro ($347 million) line of credit, tapping a key source of cash as the embattled German landlord grapples with short seller allegations that have sent its stock and bond prices plummeting.

Adler had arranged the revolving credit facility with Barclays Plc, Deutsche Bank AG and JPMorgan Chase & Co. in March and listed it as available liquidity in its latest earnings report in August. Since then, it has drawn down the full amount, said a person familiar with the matter who asked for anonymity discussing the private information.

Officials for the banks declined to comment. A spokesperson for Adler didn’t respond to multiple requests for comment.

The use of the revolving credit facility underscores the delicate situation of the German real estate firm as it embarks on asset sales to lower its $9 billion debt pile. The firm’s co-chief executive officer said on Aug. 31 that the company didn’t anticipate using the facility.

Some of the world biggest banks have been reviewing their relationships with Adler, after an anonymous whistle-blower warned of murky business connections and complex cross holdings used by Austrian tycoon Cevdet Caner to control the company, Bloomberg has reported.

The allegations, along with an attack from short seller Fraser Perring, could make it difficult for Adler to access the bond markets. Adler Group’s last bond transaction in April this year priced at a yield of 2.5%. By comparison, Adler’s 500 million-euro bond due to mature next month, of which 170 million euros remains outstanding, is bid at a yield of 9.9%, according to Bloomberg prices.

Adler last month said it reached a deal to sell assets valued at more than 1 billion euros. Net proceeds should be about 600 million euros after repayment of secured loans, which would bring the firm’s loan-to-value ratio of less than 50%, the level Adler said it was aiming for in the medium term.