JPMorgan, Citi get relief from Adler market turmoil as loan gets paid

London

JPMORGAN Chase and Citigroup were among lenders paid back when Vonovia made a surprise loan to the biggest shareholder of embattled German landlord Adler Group a week ago.

The banks, together with Banco Santander, received repayment on their portion of an about 200 million euro (S$312.8 million) margin loan to Aggregate Holdings, according to people familiar with the matter, who asked not to be identified because the matter is private.

The deal Vonovia struck has spared the international banks some of the turmoil facing Adler as it tries to fend off a short seller attack that has hammered its shares. Global lenders are keeping a close watch on Adler's efforts to sell assets and cut debt as many large firms have loans to the property company or to its backers. Representatives for JPMorgan, Citi and Santander declined to comment.

Adler Group, which was created via a three-way merger last year, has come under pressure that intensified when Fraser Perring's Viceroy Research published a report that criticised the firm's governance and disclosures and accused it of being "built on systemic dishonesty".

Adler's shares dropped to a record low of 10 euros on Oct 6. They climbed to 11.82 euros on Oct 15 in Frankfurt trading. The company has rejected the short seller's allegations and Austrian investor Cevdet Caner, whose family backs Adler, filed a criminal complaint against Perring.

In a surprise move recently, Vonovia provided a loan of more than 100 million euros to Aggregate in a deal that gives Germany's largest real estate company the option to buy 13.3 per cent in Adler for 14 euros a share. The money allowed Aggregate, a private holding company controlled by Austrian financier Guenther Walcher, to repay the outstanding margin loan related to its stake in Adler.

The news initially helped to stabilise Aggregate. Its bonds due 2025, which were indicated at US$0.59 on the euro on Oct 7, rose to US$0.65 the following day. They have since tumbled to a record low of US$0.57. BLOOMBERG