A Greek société anonyme (S.A.) operating hotel facilities found itself confronted with the termination of all its loan agreements concluded with a credit institution — its sole lender — and was called upon to pay an amount exceeding €2,500,000.
The cooperation between the family-owned company, its shareholders–guarantors, and the said bank had spanned over 20 years, with the servicing of its loan obligations being largely carried out through assigned rental income derived from the lease of its hotel complexes.
The termination of the loan agreements was triggered by the company’s inability to pay to the fund that had succeeded the credit institution an amount of €850,000, which, under the relevant restructuring agreement, was to originate from the sale of one of the company’s hotels. However, this sale had not been completed due to objections raised by certain shareholders regarding the necessity and advisability of the transaction, which was also linked to a change in the company’s shareholding structure.
This was because the purchaser of the property was to be a company related to one of the shareholders, which would subsequently withdraw from the company and be released from its guarantee obligations toward the lender. Therefore, the transaction required the selection of an appropriate vehicle, both from a corporate and tax perspective.
Through the collaboration of legal and financial advisors, the company developed a bank restructuring plan, on the basis of which it initiated negotiations for the re-settlement of its debt, which by that stage had exceeded €3,000,000.
The objective was to achieve a sustainable restructuring, allowing sufficient time to complete the sale of the property — a transaction through which the company intended to immediately repay one-third of its debt. However, as the fund sought full recovery of the debt within five years under unfavorable interest terms, the company opted for a refinancing solution.
Through this approach, the company achieved: (a) a partial write-off of the debt owed to the fund and retroactive application of a favorable interest rate, in view of the immediate repayment of the disputed amount, and (b) the restructuring of the remaining debt under favorable terms adapted to its financial capacity, namely a reduced interest rate and a 12-year repayment period.
The refinancing was carried out by a domestic credit institution through the issuance of an interest-bearing common bond loan amounting to €1,450,000. Within this framework, multiple securities were provided, including mortgage pre-notations, pledges of shares, rental and deposit account assignments, as well as personal guarantees from the shareholders.
In this case, the optimal balance was ultimately found in the refinancing solution, which managed to reconcile the opposing interests of the investor (rapid recovery) and the company (sustainable financing terms) in the most advantageous manner.
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