Cushman sets up $50m safety net

Cushman & Wakefield’s Italian parent company has set up a $50m facility to strengthen its subsidiary’s balance sheet after it made a €20.2m ($27.3m) loss in 2008.

Exor, the investment arm of the Agnelli family, which owns 72% of Cushman, revealed the loss – which included one-off charges – in its results for 2008 on Wednesday.

It said it was close to finalising a transaction with Cushman to provide a $50m, three-year credit facility, which Cushman can use at any time to shore up the business.

In the results, Exor said: ‘The transaction, which will be finalised shortly, guarantees an interesting return for Exor that reflects market conditions. The purpose of the credit line is to strengthen the financial structure of the subsidiary and also enable it to take advantage of growth opportunities.’

If one-off charges are not taken into account, Cushman made a profit of $2.5m in 2008. The one-off charges include a $26m depreciation and amortisation charge following Exor subsidiary Ifil’s acquisition of Cushman. In 2007, Cushman made a €48.4m profit. Its net revenues were $1.52bn for 2008, down from $1.8bn in 2007.  

The results are an improvement on the half-year figures, when Cushman made a loss of $67.3m, including one-off charges, and back up its argument that it performs better in the second half of the year.

Robert Rozek, chief financial officer of Cushman, told Property Week that the firm was focused on its core business as well as managing costs and building relationships with clients. He stressed the loan would operate as a revolving facility and would only be drawn down if needed.

He said: ‘It’s an insurance policy. It’s only there if we need it, and we anticipate we will not need it. We have done a lot of things such as cost cutting but in the event of the economy going off a cliff again, as it did in the fourth quarter of 2008, we wanted something in place.’

He said that Cushman had also gone to its banks to amend its credit facilities and give itself more flexibility, although this did not involve changing covenant levels.

At the end of the year, the firm had $233m of debt. Its credit facilities allow for $350m of borrowing capacity, Rozek said.

Cushman can use the new $50m facility at any point and in any denomination it needs over the next three years. The facility will expire on 30 May 2012. If at that date it cannot be repaid, Exor will have the right to convert the loan into Cushman shares. It can do this at a level equal to the lowest independent valuation made of the shares over the life of the loan, plus a further 30% discount.