Olympia & York Developments Ltd. said Thursday it is prepared to offer up to 80 percent of its equity to creditors as part of a restructuring plan.
”The plan is equitable, realistic and beneficial to creditors,” said O& Y President Gerald Greenwald.
Greenwald said the plan is aimed at enabling the company ”to honor obligations to all of its creditors” and that O&Y is ”very satisfied” with the progress achieved in recent weeks in its talks with creditors.
O&Y said it wants its project lenders to accept a five-year extension of debt maturities, with O&Y receiving management fees to continue to operate the buildings. Revenue in excess of operating expenses would be applied to reduce debt, the company said.
Non-project lenders would initially receive a 49 percent share of the company`s current common equity, O&Y said.
At the end of the five-year period, any remaining unsecured debt would be converted into additional equity up to a maximum of 80 percent, the company said.
O&Y said its shareholders, the Reichmann family, are prepared to contribute ”significant” assets to the restructuring.
For example, the Reichmanns are prepared to transfer a 20 percent interest in O&Y`s U.S. properties and their interest in R.F. Real Estate Investments Inc. to the restructuring.
The company said it wants an extension on the maturity dates on loans secured by its investments in Gulf Canada Resources Ltd. and Abitibi-Price Inc. and loans to Carena Developments Ltd.
The marketable securities and Carena lenders would be allowed to sell their securities in an orderly manner within five years, O&Y said.
O&Y released details of the proposal a day before it is required to file the plan with an Ontario court. O&Y has been operating under Canadian bankruptcy protection since May 14.
A proposed restructuring plan outlined in May was rejected by creditors.
It included proposals to extend principal payments on O&Y`s debt for five years and an offer of up to a 20 percent non-voting stake in the privately held real-estate company.
O&Y lawyer David Brown said that Thursday negotiations with O&Y`s major creditors were ”almost there,” while negotiations with smaller creditors were just getting under way.
Brown said it didn`t make sense to negotiate with third-mortgage holders before first-mortgage holders.
O&Y had until July 13 to file a restructuring plan, but was later granted an extension, which expires Friday.
On July 10, O&Y reported a fiscal 1992 loss of $1.76 billion.
At the time, Greenwald said he was quite optimistic O&Y was capable of agreeing to a restructuring plan with its lenders.
