© Reuters. The logo of SBB is seen at company’s headquarters in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes/File Photo
(Reuters) -SBB said on Tuesday that one of its creditors had started legal proceedings against the Swedish property group for debt recovery, citing a breach of a bond clause.
Although the company did not disclose the name of the bondholder, it said the combined debt owned by the party represented 46 million euros ($49.43 million).
Reuters reported in November that U.S. hedge fund Fir Tree Partners was accelerating its notes and starting proceedings against SBB for debt recovery, the first such official demand faced by the landlord.
Britain’s court website showed that Fir Tree filed a claim with HM Courts & Tribunals on Feb. 5 against SBB. No documents regarding that case were immediately available. Fir Tree declined to comment.
SBB said on Tuesday it firmly rejected the allegation that it was in breach of a consolidated covenant ratio – a measure of a company’s ability to service its debt – set among the terms of that borrowing programme.
The company also said it considers the acceleration notice received from the bondholder ineffective.
The group is at the epicentre of a property crash that threatens to engulf the Swedish economy, having racked up vast debt by buying public property, including social housing, government offices, schools and hospitals.
Carlsquare analyst Bertil Nilsson said the bondholder demand for repayment is a disadvantage for SBB.
“But this is an attempt by them to make money and SBB must defend the position that this is not a breach of covenant,” Nilsson added.
“The process can take 18 months, and I would guess that SBB probably has a better chance of winning than the bondholder,” he said.
SBB had in late May made several accounting adjustments to its first-quarter report, which some credit analysts suggested would have breached interest coverage requirements for the quarter without those changes.
($1 = 0.9306 euros)