Allianz SE said it will terminate Pimco’s legacy employee equity plan, known as the M Unit Plan, at a cost of at least €1.4 bn.
The insurer said it exercised its right to end the plan and will buy outstanding Pimco M units for cash. Allianz owns Pimco, the bond manager whose employee ownership structure has remained a sensitive part of its long-running compensation model.
Allianz said Pimco awarded M unit options to employees between 2008 and 2020. Outstanding units held by former and current employees represent a 9.4% ownership stake in Pimco.
Current Pimco employees get a different route. Allianz said they have the option to retain their M units under a new contractual regime until after their employment ends. Former employees hold 4.4% of Pimco in total, which means Allianz will pay at least €1.4 bn in cash at closing under the plan’s rules.
The move comes as Pimco also faces legal pressure tied to a large European property loan.
PIMCO and Legal & General Group have been accused of placing undue pressure on property valuers in a dispute over The Finance Tower, a 142-metre office tower in Brussels.
The building’s owner has entered insolvency and is fighting lender efforts to freeze rental income.
The owner filed a lawsuit in the English High Court to slow the lenders’ move, according to filings in London and New York courts.
The building is ultimately owned by JR Global REIT, a Korean-listed property investment vehicle placed into insolvency last month. JR REIT bought the tower in 2020 using about €724 mn of debt. Almost half of the financing came through PIMCO from four Allianz-owned entities.
L&G and Sumitomo Mitsui Financial Group each provided about €135 mn. BayernLB provided about €90 mn.
In a New York filing seeking documents from L&G’s Chicago-based US unit, lawyers at Boies Schiller alleged the lenders tried to push down the building’s value. They said the aim was to trigger a loan condition that would trap cash and direct it toward debt reduction.
The owner’s lawyers said the lenders were trying to manufacture a cash trap event. They alleged the lenders pressured Knight Frank valuers to cut the valuation below €950 mn, or about $1.1 bn.
Large office towers such as The Finance Tower rarely trade, which gives both sides more room to fight over valuation. Knight Frank resigned as valuer. JLL later appraised the building at about €920 mn.
JR Global’s lawyers called the JLL valuation unreasonably low. They said Knight Frank had produced a report valuing the building closer to the €1.2 bn purchase price.
Representatives for Knight Frank, L&G and PIMCO declined to comment on live litigation. JLL did not respond to a request for comment.
