Wireless is not the only game that distressed asset specialist Newton Glassman and his team at Catalyst Capital Group are playing. The private equity fund is also working on a big real estate restructuring, with an eye to gaining control of more than $1.5-billion of property.
Mr. Glassman's firm has been in the news mainly for its plan to create a fourth wireless player in Canada where others have failed.
But at the same time, it has been working to take ownership of a big real estate company that ended up in a restructuring.
The company in play is Homburg Invest Inc., a Dartmouth, N.S.-based real estate company with assets in such European countries as Latvia, Germany and Holland.
Catalyst bought up a stake in a group of obscure Homburg mortgage bonds that were issued in Holland. After some fighting – including a showdown with the trustee – Catalyst has now parlayed that into a seat at the negotiating table that may well result in the private equity fund owning a significant chunk of the company. (Homburg Invest in fact put out a warning in January to bondholders who were getting an offer from Catalyst, saying that the intention of Mr. Glassman's firm was "not to offer all bondholders of HII a cash exit, but solely to increase its influence over the restructuring process for its own benefit.)
The bonds were secured by properties, putting Catalyst in a strong position to exert control over the proceedings. It's a tactic Catalyst refers to as finding the "fulcrum security."
Now, it appears Catalyst and Homburg have reached détente, with the head of the real estate company now hailing Catalyst as a potential "valuable strategic partner" when Homburg emerges from its restructuring.
Catalyst and Homburg entered into talks last month about a support agreement that would give creditors the ability to choose cash from Catalyst in place of shares in the new company that is expected to emerge after the restructuring. Those talks fell apart after a couple of weeks, but then restarted and Catalyst and Homburg were able to come to an agreement.
Homburg announced Wednesday that there is now a deal in place that would "include the possibility for affected creditors to receive a cash payment from Catalyst instead of shares of a new corporate entity ("Newco") that they would otherwise receive under the plans."
(Boyd Erman is a Globe and Mail Reporter & Streetwise Columnist.)
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