(Bloomberg) -- Sweden’s SBB will sell €2.8 billion ($2.94 billion) of new notes after bondholders agreed to exchange their existing securities in the cash-strapped landlord.

Samhallsbyggnadsbolaget i Norden AB — as the group is formally known — offered bondholders the opportunity to swap, in part to put creditors closer to their assets after they overhauled their property holdings. However the new securities also amended the covenant that has been the focus of litigation from US hedge fund Fir Tree Partners.

Under the new terms, the consolidated coverage ratio is explained with greater clarity and was also switched from a maintenance to an incurrence covenant. 

The move by SBB inspired pushback from some analysts. Mary Pollock at CreditSights argued that creditors should “organize and push” for the covenant to be kept as a maintenance covenant, as well as tighter restrictions around use of proceeds from asset sales, according to a note last week.

Fir Tree will challenge SBB in court next month over an alleged breach of the consolidated coverage covenant last year, with a number of other funds also declaring their intention to demand repayment on their debt over the issue. SBB has denied the claims.

SBB also bought back some bonds as part of the debt plan. Of the seven issues up for tender, only two series of notes were bought back, totaling €107 million and 40 million Swedish kronor ($3.65 million), respectively.

©2024 Bloomberg L.P.