Italy’s luxury hospitality group Bauer spa, owner of the iconic Bauer Hotel in Venice, announced yesterday a debt restructuring of its 110 million euros senior banking defaulted debt thanks to a complex agreement with Blue Skye Investment Group, a special situations private equity and debt operator which is also going to invest 20 million euros of new cash in the relaunch of the company’s business.
Francesca Bortolotto Possati will remain in control of the company. Mrs. Bortolotto Possati is nephew to Arnaldo Bennati, a succesful shipbuilder from the Liguria Region who bought the hotel in 1930 from the Bauer-Grünwald family,
Led by Salvatore Cerchione, Blue Skye is not new to save well known but struggling brands in Italy, the last one having been the deal of Harry’s Bar in Venice, famous for its peach-and-prosecco Bellini cocktails and visitors such as Ernest Hemingway. Blue Skye restructured 6 million euros of debt of the Cipriani family hoilding company in 2012 and bought a 16% stake in the shareholders capital. as Financial Times wrote back then.
Blue Skye Investment Group was born at the end of 2008, when US alternative asset manager D.B. Zwirn sold the controlling stake in Blue Skye Investment Company to Italian investment companies IDeA Alternative Investments sgr and Dea Capital and to the Blue Skye’s management itself all together through the veichle Stepstone Acquisition sarl, as explained nel in Dea Capital consolidated FT 2008 statements.
Coming back to the Bauer deal, the banking senior debt owed by the group (above all versus Unicredit, Intesa Sanpaolo, Mps and Banco Popolare) has been acquired by a securitization special purpose veichle named Hadar and maturity hase been brought to 4 years, MF Milano Finanza writes today.
In a few weeks’ time Bauer will then issue a senior bond with a 4 years maturity paying a 7% coupon which is going to be secured by the same real estate that is now a collateral for the loans that is to say the five stars hotel headquartered in the Bauer Palace in Venice quite close to San Marco Square. The bond will be subscribed by Blue Skye and other investors, Proceeds from the issue will be used by Bauer to buyback its debt from Hadar.
The bond will be listed on an international market, maybe the Third Market in Wien, The issue will have a 130 million euros size so that Bauer will be able to finance new investments for relaunching its business.
As part of the deal, Bauer ageed to sell no-core assets such as Aziende Agricole Bennati (there is a preliminary sale agreement which will be executed in the next few weeks) and the real estate properties located on the Giudecca island that are the so called Palladio complex (Bauer Palladio Hotel&Spa) and Villa F (an exclusive villa for clients who prefer more privacy).
Each time a property will be sold, proceeds from the sale will be used to reimburse part of the bond. It is estimated that the all real estate on sale might be valued 70-80% of the bond size,
The deal hase been conducted among the framework of a debt restructuring as stated by art 67 of the Italian Bankruptcy Law. Bauer is supported by the financial advisor Cassiopea and by the legal advisor Gattai Minoli Agostinelli Partners. Blue Skye is instead advised by 5 Lex and RCC Lex law firms. Fiscal issues have been addressed finally by studio legale e tributario F&C.