Pål Georg Gundersen out of the chairman's chair in Merkantilbygd

Article taken from DN - read full article here.

Property billionaire Pål Georg Gundersen has sold off property to pay off his billion-dollar debt. Now he has handed over the job of general manager to Martin Paul Hoff.

While interest costs are skyrocketing, Munch collector and property billionaire Pål G. Gundersen (71) has been trying to sell properties both in and outside Oslo to deal with a debt of close to nine billion kronor.

Gundersen founded the real estate empire Merkantilbygd in 1979, and the Group currently has well over 2000 rental units. The portfolio consists mainly of residential properties in Oslo, but the Group also has extensive operations in Stavanger and Geilo, as well as a number of commercial buildings.

— At your own request

Gundersen has now stepped down as General Manager of Merkantilbyggas. The new general manager of the company is Martin Paul Hoff (50).

“Starting today, December 1, I take over the baton as General Manager of the MerkantilBYGG Group. I thank the trust of both the principal owner and the board of directors and look forward to an exciting time for both the company and the undersigned!” , Martin Paul Hoff wrote on his LinkedIn profile on December 1.

That's right. I took over as general manager of Merkantilbygget Group on December 1,” he writes in an email to DN.

Hoff was until his promotion chief financial officer of the company.

The change of chairman is not registered in the Brønnøysund registers, and Gundersen remains chairman of the board of Merkantilbyggas, according to the Brønnøysund registers.

— Registration in the Register of Enterprises of this change takes place these days. Please note that the parent company of the Group is Merkantilbygd Holding as (not Merkantilbyggas). There are not changes to the corporate board, Hoff writes.

“Pål has, at his own request, and in line with a plan laid down nearly two years ago, stepped back and continues to work to safeguard the interests of the main owners through his board representation,” he writes.

Pål Georg Gundersen informs DN that he stepped down from the chairman's chair in connection with his 70th birthday on February 1 last year. Then Ole Anders Engebretsen took over. “When Engebretsen quit on 1 June this year, I formally took over the role again for 6 months until Martin Hoff now took over on 1 December,” Gundersen writes in an email.

Selling in Stavanger

Merkantilbyggning Holding has close to NOK 9 billion in debt. At year-end, 75 per cent of this debt had floating interest. What is the status at the end of the half-year was not revealed in the half-year accounts, but probably the total interest costs this year will pass NOK 600 million with a good margin.

Gundersen's Merkantilbyggning Holding, among other things, is in the market to sell everything he owns in Stavanger, a total of ten properties, wrote Stavanger Evening Gazette in November. The newspaper wrote that the price quote, according to a prospectus from DNB Markets, is NOK 700 million.

But it's not just in Stavanger that Gundersen is trying to sell. According to Finansavisen, commercial brokers are in the process of selling the Oslo properties St. Olavs gate 2 and 4, Akersgata 73 B-E, Ullevålsveien 1 and Løvenskiolds gate 1.

Earlier this autumn, Merkantilbygd sold two-thirds of the shares in the major development Spro Havn at Nesodden outside Oslo to Hersleth Entreprenør and Bolig& Eiendomsfor an undisclosed sum. The company has also been on the market this autumn to sell an apartment building in Moss with a price quote of 50—60 million kronor, according to Moss Avis.

While there is an ongoing effort to sell larger properties in its portfolio, Gundersen has sold a number of smaller properties this year.

In November, Estate Nyheter reported that Merkantilbygd has sold the properties Slemdalsveien 63, Holmenveien 11 and Øvre Smestadsvei 1 to Ragde Eiendom, which is owned by Edgar Haugen.

In addition, Nordvik Bolig is in full swing with the sale of the apartments Merkantilbygd Holding owns in Fagerborg street 50 a and b in Oslo. There, Nordvik has a settlement as a pledge of NOK 100 million.

Not in violation

In November, while he was still CFO, Hoff told Finansavisen that there is a desire by the board and owners to reduce the group's debt in order for the companies to have a financial position that is competitive.

He also confirmed that the company has ongoing sales processes in the market, and expects to carry out property sales in the next six months at sensible prices.

In November, Finansavisen reported that a notice in the Brønnøysund Register showed that Gundersen no longer has the right to sign on his own. The signature right has been changed to “two directors jointly”.

Hoff clarified to the newspaper that this is normal for a group with good internal procedures, and that Gundersen can still sign, but now together with another board member.

Following the article, Hoff wrote in an email to DN that “Merkantilbygget and other real estate companies are affected by interest costs. However, the underlying operation is doing well, according to Hoff:

“All three main business areas Rent/Frogner House/Geilo show increased revenues in 2023, and this growth will continue into 2024. It is a desire of the Board of Directors and owners to reduce the Group's debt in order for the company to have a financial position that is competitive both in the short and long term. We have ongoing sales processes in the market and see that property buyers are returning to the market, now that long-term interest rates have come down somewhat in recent weeks. We expect to conduct property sales in the next six months at reasonable price levels.”

He added that Merkantilbyggare has not been in breach with any of the loan agreements.

“Based on estimates for 2023 and 2024, and the constructive dialogue we are having with our main banks, it is our assessment that we will not enter into any deal breaches going forward either,” he wrote, adding that “the company is in control of the financial situation, and the prospects for Merkantilbyggen, our employees and external creditors are good.”

Via Pål Georg Gundersen out of the chairman's chair in Merkantilbygd by Bjørn-Egil Mikalsen and Harald Berglihn, taken from dn.no 20.12.23

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