SBB Bondholder Drops Lawsuit Against Property Group

In a significant development, one of the main creditors of Swedish property group SBB has decided to drop its lawsuit against the company. Fir Tree Partners, a U.S.-based hedge fund, has scaled back its claims and two of its three funds have withdrawn from the legal proceedings. This move comes after the completion of exchange offers and a reduction in the fund's holdings in the Notes subject to the ongoing legal proceedings.

SBB, the Nordic region's leading property company in social infrastructure, has been embroiled in a legal dispute with Fir Tree Partners since 2023 over an alleged breach of its consolidated coverage ratio covenant. The dispute centered around the company's ability to service its debt, with Fir Tree Partners initially seeking legal remedies and an accelerated bond repayment.

However, following the results and completion of the Exchange Offers, Fir Tree Capital Opportunity Master Fund LP and Fir Tree Value Master Fund LP have discontinued their claims against SBB. Additionally, Fir Tree Credit Opportunity Master Fund LP, the sole remaining claimant, has decreased its holdings in the Notes to EUR 7.5 million, spread across both 2020 and 2021 EMTN programmes. The fund has also filed amended particulars of claim to reflect this reduction.

SBB has maintained its position that it is not in breach of the EMTN consolidated coverage ratio and is well prepared for the upcoming trial in the High Court, set to begin on 14 January 2025. The company has expressed confidence in its ability to defend itself against the remaining claimant's allegations.

The withdrawal of two funds and the reduction in claims by the remaining fund have significant implications for SBB's financial stability and future prospects. The reduced legal uncertainty allows the company to focus on its core business operations, potentially leading to improved access to capital markets, enhanced reputation, lower interest costs, and a focus on core business operations. This development could ultimately contribute to SBB's financial stability and future prospects.



The implications for other bondholders and their potential legal actions against SBB are also noteworthy. The reduced likelihood of success for the remaining claimant may discourage other bondholders from pursuing legal action. Additionally, the potential for a settlement or the formation of a quasi new ad-hoc group could provide alternative paths for bondholders to address their concerns without resorting to legal action. However, any legal process remains uncertain, and bondholders should carefully consider the risks and potential outcomes before deciding to take legal action against SBB.

In conclusion, the decision by Fir Tree Partners to scale back its claims and the withdrawal of two funds from the legal proceedings against SBB have significant implications for the company's financial stability and future prospects. The reduced legal uncertainty allows SBB to focus on its core business operations and potentially improve its access to capital markets, reputation, and interest costs. The implications for other bondholders and their potential legal actions against SBB are also noteworthy, with the reduced likelihood of success for the remaining claimant potentially discouraging other bondholders from pursuing legal action. However, any legal process remains uncertain, and bondholders should carefully consider the risks and potential outcomes before deciding to take legal action against SBB.