SMALL business landlord Sirius Real Estate announced plans yesterday for a €40m (£33.2m) share issue to help pay down debts as it swung back into profit in the first half.
The Aim-listed firm, which runs business parks in Germany, has undergone a dramatic turnaround since issuing a profit warning three years ago that left it in breach of its banking covenants.
Andrew Combs, who was parachuted in as chief executive in 2010, said: “The fundraising represents the final stage of recovery for Sirius.
“It has allowed us to lower our loan to value to just under 55 per cent which has in turn allowed us to get better banking arrangements and free up €40m of cash flow a year which will help with the future dividend,” he told City A.M.
The share placing will be offered to new and existing shareholders, at 24 cents per share.
Combs added that institutional investors such as F&C and Henderson, who had exited their positions in 2010, were returning to the stock in a sign of growing confidence in its recovery.
“We are seeing short term activists move off the register and long term institutions coming back,” Combs said.
Sirius reported an €11m profit in the six months to 30 September, up from a loss of €5.5m. Its net asset value per share rose to 48.96 cents.
Peel Hunt’s head of corporate sales & syndication Andy Crossley is advising Sirius Real Estate on its €40m share placing together with corporate finance directors Capel Irwin and Hugh Preston.
Crossley has been head of corporate sales and syndication since April 2011. Prior to this he was a fund manager at Invesco, whilst also holding the position of director at insurance broker Baronsmead VCT.
The trio have worked on a string of property deals of late including Primary Healthcare Properties’ £60m fundraising in May and Redefine International’s corporate restructuring last month.
Commenting on Sirius’s placing yesterday Peel Hunt said: “This fundraise is a transformational deal for Sirius, reducing their loan to value and refinancing their two outstanding debt facilities. The management team can now focus on driving property values via maximising income from their portfolio of 30 German commercial property estates.”
Sirius is issuing 166.6m new ordinary shares at 24 cents per share, representing a four per cent discount to Tuesday’s share price and half of the company’s market capitalisation. Chief executive Andrew Combs said the share placing was oversubscribed, with investors offering €80m on what was a €40m capital raising.
Proceeds from this and the two new loan facilities would be used to repay the outstanding debt facilities with banks RBS and BerlinHyp in full, Sirius said. It expects to complete the placing as soon as today.