SBB swaps debt, elects chair as restructuring moves forward

By Marie Mannes and Greta Rosen Fondahn

STOCKHOLM (Reuters) -Creditors of Swedish real estate firm SBB have agreed to swap some debt for bonds in a residential property unit, part of the wider group's ongoing restructuring that also saw the election of a new board chair, the company said on Friday.

SBB is at the centre of a Swedish property market bubble that began to unravel in 2022 when inflation and interest rates soared, triggering sharp cuts to its credit ratings and a plunge in its share price.

The debt swap took place at a deep discount to the original amounts, allowing the group to book the difference as a gain in equity of 1.8 billion Swedish crowns ($169.66 million), CEO Leiv Synnes told Reuters.

The debt which creditors had agreed to exchange for new bonds in the residential unit, as well as for some cash, was worth 3.9 billion Swedish crowns at face value, he added.

Loss-making SBB had net debts of some 56 billion crowns at the end of March.

Creditors agreed to exchange debt for bonds in SBB's residential unit Sveafastigheter in the amount of $157.5 million, preparing the subsidiary for an initial public offering or stake sale.

"This is the last major step to get Sveafastigheter ready and for a capital raising," Synnes said.

Shareholders separately on Friday elected Lennart Sten as SBB's new board chair, despite recommendations from proxy advisers for the annual general meeting to reject his candidacy.

Sten, until now a senior adviser to the SBB board, takes over from Lennart Schuss who held the position of chair since 2017.

Proxy advisers Institutional Shareholder Services and Glass Lewis had both recommended shareholders to vote against Sten's appointment, saying he could be considered to hold too many board positions, according to documents seen by Reuters.

Sten told the AGM that he believed he had sufficient time to fulfil the assignment as board chair.

Sweden's Aktiespararna shareholders association voted yes to the new board, after raising questions to the outgoing board during the meeting.

"Hopefully we can see a turnaround for SBB from now on", Sverre Linton, chief legal officer at the association, told Reuters.

($1 = 10.6095 Swedish crowns)

(Reporting by Marie Mannes and Greta Rosen Fondahn; Editing by Terje Solsvik and Alison Williams)