Sweden’s Oscar Properties sells real estate at discount to keep creditors at bay

By Greta Rosen Fondahn and Marie Mannes

(Reuters) -Sweden’s Oscar Properties has reluctantly agreed to sell real estate at a discounted price of 2.2 billion Swedish crowns ($214 million) to repay loans from Norwegian bank DNB and other smaller creditors, the company said on Monday.

High debts, rising interest rates and a weak economy have left Swedish property companies buckling under soaring borrowing costs and slower demand.

“We would have liked to have continued to own these properties, but our senior bank DNB wanted to have its loans repaid,” CEO Carl Janglin said in a statement on Monday.

The real estate involved in the forced sale has an estimated value of around 3 billion crowns, the company said, with the sale representing a discount of 27%.

Shares in the company shot up 85% immediately after the sale before paring gains to close up around 19%. The stock has lost more than 80% in the last 12 months.

Oscar said in a statement it would continue talks with owners and remaining lenders on how to restore equity and add new capital.

“(This) may also lead to further reductions in organisation and central costs. Corporate restructuring can also be a possible way out,” it said.

Oscar in October said high interest rates had drained liquidity, and its survival hinged on attracting new capital.

Later in October, two banks demanded the immediate repayment of loans to the company, with one of the banks in November rejecting a proposed rescue plan.

The buyer of the properties on Monday was property mogul Erik Selin, through his company Erik Selin Fastigheter. He was not immediately available for comment.

Carlsquare analyst Bertil Nilsson said there appeared to have been little competition to buy compared with previous auctions and that the deal could weigh on property values more generally during the first quarter.

($1 = 10.2950 Swedish crowns)

(Reporting by Greta Rosen Fondahn; editing by Terje Solsvik and Barbara Lewis)