Summit Germany has breached an 85% loan-to-value (LTV) covenant on a €96m loan secured against a portfolio representing 12% of the group’s gross property assets.
The AIM-listed company said in an announcement today that: ‘Relevant subsidiaries of the company have now been notified that a circa €96m loan facility is in breach of its LTV covenant of 85%.
‘Due to the relevant portfolio's strong income stream, the interest cover covenant on this facility is within its limits, as is the case in respect of the group's other facilities.’
It said it had approached the lender, on behalf of the subsidiaries, to discuss a resolution.
The board said it ‘believes that given the group's strong cash flow and management performance that a suitable outcome can be achieved on this matter as soon as possible and will make any further announcements as appropriate’.
Summit Germany said in January that the current difficult climate meant that property capital valuations were ‘coming under severe pressure’ and that most of the group’s debt facilities were close to the upper limit of the LTV covenants.
It will announce its results for the 2008 financial year on 31 March 2009.