A low-profile hedge fund is said to be attempting to buy the debt secured against Vincent Tchenguiz’s beleaguered residential property business at a big discount to its face value.
Clifden IOM No.1, an Isle of Mann-based fund, has offered to buy £420 million of senior debt from bondholders of sheltered housing company Fairhold at a 60% discount.
This is so it can have an influence over the restructuring process of the business, Bisnow said.
The fund has also offered to buy the company’s £20 million junior debt at a 99% discount to its face value.
Clifden is a specialist real estate hedge fund that has bought almost £2 billion of UK residential mortgages in the past four years.
Other hedge funds, including Hayfin, have already bought into Fairhold’s debt as the company seeks a resolution to its financing issues.
The company has a portfolio which comprises the ground rents of more than 18,000 sheltered accommodation apartments in 406 blocks across the UK.
Moody’s estimated it was worth more than £550 million in 2015, but since then the portfolio has been struggling with a huge debt pile.
In addition to the £440 million of securitised debt Clifden is trying to buy, there is an interest rate swap liability of more than £500 million.
This puts the total amount of debt liabilities at almost £1 billion.
The borrower — essentially companies controlled by Tchenguiz — bondholders and banks have been trying to restructure the debt since the loan matured in 2015.
Tchenguiz tried to sell his entire ground rent portfolio for £3.5 billion in 2012. He was on the verge of launching the sale the night before he was arrested in 2011 in relation to a Serious Fraud Office (SFO) investigation looking into the collapse of Icelandic bank, Kaupthing. However, he was released the same day without charge.
No single buyer was found at the price he wanted. Instead, he sold a portfolio worth £250 million to a fund backed by Hong Kong tycoon Li Ka-Shing in September 2014, and refinanced other parts of the portfolio.
In 2002, he set up Consensus Business Group, which advises on an investment portfolio of residential freeholds and commercial properties valued by Lazard in 2012 at approximately £3 billion.
In March 2011, the High Court in London ruled that Tchenguiz could sue Kaupthing for damages of £1 billion and a confidential out of court settlement was reached. Tchenguiz and other parties in the case subsequently wrote to the SFO, seeking damages of around £100 million. The SFO later admitted factual errors and offered to pay reasonable legal costs.
DealMakerz notes that these incidents aren’t the only time Tchenguiz has been brought into the spotlight.
Earlier this year, Proxima GR Properties, owned by the Tchenguiz family trust, refused to replace flammable cladding similar to the material responsible for the Grenfell Tower fire.