Baltic Horizon Fund Seeks Early Redemption and Financial Flexibility
Baltic Horizon Fund, a publicly closed-end real estate fund, is taking proactive steps to enhance its financial position. The Issuer has recently put forward a request for a temporary waiver concerning the debt service coverage ratio covenant related to its EUR 42 million 5-year floating rate bonds, which are set to mature in 2028. This strategic move comes as the fund aims to maneuver through the current economic landscape affecting Baltic economies.
Modification of Debt Service Coverage Ratio Covenant
At present, the nominal amount outstanding for these Bonds stands at EUR 22 million. The fund has previously redeemed Bonds, following the established terms and conditions, which now serve as a foundation for the proposed modifications. The management has evaluated the financial outlook and recognizes the need to adjust the debt service coverage ratio covenant for a specified duration.
The fund is requesting that holders of the Bonds consider amending the debt service coverage ratio covenant, lowering it for a period extending from late September 2024 through late September 2026. Baltic Horizon Fund assures all Holders that its capacity to meet its monetary obligations remains intact, thus affirming its financial stability during these challenging times.
Plan for Early Redemption of Bonds
In conjunction with the request for waiver, the Baltic Horizon Fund has also proposed an additional obligation aimed at ensuring a mandatory early redemption of the Bonds. This would involve a total nominal amount of EUR 3 million, which is intended to occur by early November 2025. Such actions reflect the fund's commitment to maintain its transparency and communication with its stakeholders.
Engagement with Bondholders
Northern Horizon Capital AS, the appointed fund manager, has actively engaged with the Bondholders, garnering preliminary consent for the proposed amendments. These amendments will be ratified through an official written consent process, adhering strictly to the established Terms and Conditions.
Holders listed in the bondholder registry maintained by Nasdaq CSD SE as of a specified date will have the right to participate in the voting process. To facilitate this, a formal notice outlining the voting instructions and relevant documents will be distributed to all Holders.
Details of the Proposed Amendments
The proposed consents requested from Holders include several critical adjustments:
- Adjusting the debt service coverage ratio requirements in the current Terms and Conditions, establishing a more manageable set of benchmarks for different periods leading up to October 2026.
- Incorporating an additional obligation for early mandatory redemption concerning a specific nominal amount by November 2025.
- Introducing associated amendment fees to compensate Holders for their consent regarding the requested changes.
This structured approach aims to foster a collaborative relationship between the Issuer and Bondholders while ensuring the fund can navigate current economic conditions effectively.
Voting Process and Quorum Requirements
The voting process has been carefully planned to ensure that it captures the opinions of the Holders appropriately. Potential voters will need to submit their voting forms by the stated deadline, allowing sufficient time for processing and counting. Importantly, for any resolution to be valid, at least 55% of the Bonds must be represented in the voting, with a two-thirds majority needed to pass the requested amendments.
Once the necessary consents are collected, the decisions will be communicated promptly to all Holders through official notifications as well as updates on the Baltic Horizon Fund's website. Importantly, any approved requests will be regarded as binding for all bondholders, ensuring a cohesive approach to the fund’s management and obligations.
Contact Information
For more details or inquiries, contact Tarmo Karotam, the manager of Baltic Horizon Fund. He is reachable via email at tarmo.karotam@nh-cap.com.
As a registered real estate fund managed by Northern Horizon Capital AS, Baltic Horizon Fund is under the supervision of the Estonian Financial Supervision Authority, ensuring transparency and compliance within the financial markets.
Frequently Asked Questions
What is the purpose of the waiver requested by Baltic Horizon Fund?
The waiver is aimed at adjusting the debt service coverage ratio to provide financial flexibility and stability amid challenging economic conditions.
What are the consequences if the Bondholders approve the amendments?
If approved, the amendments will be binding on all Holders, ensuring the fund can proceed with its planned financial adjustments.
What is the financial status of Baltic Horizon Fund?
Baltic Horizon Fund confirms that its ability to meet monetary obligations remains unaffected, indicating stability despite the economic environment.
Who has the authority to vote on these proposed amendments?
All Holders listed in the bondholder registry on a specified date are entitled to vote on the proposed amendments.
How will Bondholders be informed about the outcomes of the voting?
The fund will communicate the voting outcomes through official notices and updates published on its website.
