Los Angeles, CA – August 25, 2009 — CB Richard Ellis Group, Inc. (NYSE:CBG) today announced that it has reached agreement to modify $994 million of debt by offering lenders the ability to swap certain existing tranches of debt for new tranches with longer dated maturities and/or less amortization.
"Extending maturities and deferring amortization on our existing credit facility is a key element of our strategy to proactively manage our balance sheet during this downturn," said Brett White, president and chief executive officer of CB Richard Ellis. "The modifications, in combination with the other steps we have taken – amending our credit agreement to increase our flexibility, selling $600 million of securities to raise capital, and lowering operating expenses while increasing market share – have greatly enhanced our financial position and helped ensure that we remain one of the industry’s best capitalized service providers, even if market conditions remain weak for an extended period."
CB Richard Ellis ended Q2 2009 with more than $300 million of cash on its balance sheet and more than $500 million of capacity available on its revolving credit facility. Its credit agreement leverage ratio as of the end of Q2 2009 was 2.47x. CB Richard Ellis’ remaining total required debt amortization payments will be $4 million in 2009, $180 million in 2010 and $234 million in 2011. The Company anticipates prepaying some of the required amortization before it comes due.
The Company swapped $243 million of its $600 million revolving credit facility into new tranches of debt expiring in June 2013, two years beyond the current expiration. Of this amount, approximately $201 million will be a new revolving facility and $42 million will convert to term debt. Depending on market conditions and other factors, the Company expects that it will seek to extend, renew or replace additional portions of the remaining original revolving credit facility before its June 2011 expiration. As of the end of Q2 2009, only $49 million was drawn on the $600 million revolving credit facility.
Consistent with its plan to spread out maturities, the Company also extended approximately $257 million of outstanding term debt by eighteen months to June 2013 and approximately $297 million of term debt by two years to December 2015. In addition, $197 million of term debt amortization was extended to December 2013. The new tranches of debt include modestly higher interest rate spreads, which the Company anticipates will average approximately 60 basis points on the net outstanding balance of the new debt. The actual incremental spread will depend on numerous factors, including the amount of any future prepayments of amortization.
"We believe this to be smart insurance against the potential for prolonged tight credit markets. If the markets improve there is no penalty for early repayment," said Robert Sulentic, the Company’s group president and chief financial officer.
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2008 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 "best in class" company and Fortune 100 fastest growing company two years in a row. Please visit our Web site at www.cbre.com.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: Certain of the statements in this release regarding the loan modification agreement that do not concern purely historical data are forward-looking statements within the meaning of the ''safe harbor'' provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including, but not limited to, the ability of the Company to remain in compliance with its obligations under its credit agreement, as well as other risks and uncertainties discussed in CB Richard Ellis’ filings with the Securities and Exchange Commission (SEC). Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, CB Richard Ellis expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If CB Richard Ellis does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. For additional information concerning factors that may cause actual results to differ from those anticipated in the forward-looking statements, and risks to CB Richard Ellis’ business in general, please refer to the Company’s SEC filings, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2009. Such filings are available publicly and may be obtained off the Company's website at www.cbre.com or upon request from the CB Richard Ellis Investor Relations Department at investorrelations@cbre.com.