London's Gherkin skyscraper enters receivership

Reuters News
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Posted: Apr 24, 2014 10:44 AM

LONDON (Reuters) - London's landmark Gherkin office tower has been placed into receivership by its creditors, accountancy firm and joint receivers Deloitte said on Thursday, paving the way for a possible sale of the skyscraper.

Germany's IVG Immobilien, which co-owns the 40-storey Gherkin with Evans Randall Ltd, filed for insolvency last year after years of cost overruns and mounting debt.

One of Germany's best known property firms, IVG sought protection last year from its creditors after failing to reach an agreement over the restructuring of its debt. It has since agreed a debt-for-equity swap with its creditors.

Deloitte said that adverse interest rate and currency movements had caused the Gherkin's total debt, which is held in multiple currencies such as the Swiss franc, to increase materially since it was first issued.

"The senior lenders were reluctant to appoint a receiver but felt they had no choice due to the ongoing defaults, which have remained uncured for over five years," joint receiver and Deloitte partner Neville Kahn said.

There were also "concerns that the borrowers' lack of equity in the transaction had caused their incentives to become misaligned with the lenders," he said.

An icon of London's skyline with its distinctive curved glass shape which gave it its Gherkin nickname, the skyscraper was built by reinsurer Swiss Re in 2004 and was sold to IVG and Evans Randall in 2007 for 600 million pounds.

In 2012, IVG said it was valued at 470-531 million pounds.

The building, which Deloitte said remains well-leased and in "trophy condition", sits on the site of the former Baltic Exchange in the City financial district.

(Reporting by Brenda Goh; Editing by James Davey and Mark Potter)