Hispania Launches a Voluntary Tender Offer For Realia With the Aim of Leading Its Recapitalization Process

26/11/2014 – Hispania Activos Inmobiliarios Press Release

Hispania Activos Inmobiliarios, S.A. (Hispania), has sent a communication today to the Spanish Stock Market Regulator (CNMV) informing of its intention to launch a Voluntary Tender Offer (the VTO) for 100% of Realia Business’ existing voting rights through its subsidiary Hispania Real SOCIMI. The Price of the VTO is of 0.49 euros per share, which will be fully paid in cash with Hispania’s own funds. This offer is subject to the acceptance by at least 55% of Realia Business shareholders, as well as to certain waivers by Hispania’s Extraordinary General Shareholders Meeting, which will be called today.

Price of the VTO

The offer is made with a cash consideration of 0.49 euros per share, which reflects, in the opinion of Hispania, the value of Realia’s rental assets, as well as the business plan which Hispania has envisaged for the land and residential promotion assets, taking into account their liquidity and their potential disposal price. Hispania does not provide any valuation report from independent experts of Realia Business’ shares and, therefore, the price per share offered may not be considered equitable price to the effects of the Royal Decree 1066/2007 in case the VTO succeeds, Hispania will start an orderly selling process of such assets in order to focus the Company on its rental business.

Complexity of Realia Business’ current financial structure

In 2013 Realia and its controlling shareholders launched a dual process to, on the one hand, search for resources to cancel the syndicated loan of the land and residential promotion business (the RB loan), which was refinanced at that time, and on the other hand, sell their stakes in Realia Business. Hispania believes that, in accordance with the commitments made in the contract for the refinancing of the land and residential promotion loan, Realia will need to carry out a capital increase amounting to approximately 800 million euro in order to cancel the loan.

Hispania wishes to lead Realia Business’ recapitalization process

Hispania intends to lead this recapitalization process and with this purpose it has reached an agreement with the RB loan current creditors in order to articulate the recapitalization of the company. In addition, and subject to the success of the VTO,

Hispania commits to the effective acquisition of 50% of the RB loan for an amount of 313 million euro.

Subsequently, with the objective of fully repaying this loan, a capital increased will be proposed, for an amount equivalent to 100% of the outstanding amount of such loan at that moment. Hispania has structured this capital increase so that it will be at a price in line with the VTO price and all Realia shareholders will be able to participate, for it will be carried out with pre-emptive rights.

Realia Business’ recapitalization will be guaranteed, because the capital increased will be fully secured by Hispania and by the rest of the RB loan creditors by means of the capitalization of such loan for any unsubscribed amount.

Calling of Hispania’s Extraordinary Shareholders Meeting

The transaction is subject to the waiver of certain limitations set in Hispania’s investment policy. These waivers must be authorised in a Hispania’s Extraordinary Shareholders Meeting which will be called today.

It is expected that the VTO will be completed during the first half of 2015, once the Spanish Stock Market Regulator (CNMV) approves the transaction. In case it were successful, it is expected that Realia Business’ recapitalization will take place during the second half of 2015.

Future of Realia Business

Hispania’s intention, once it has gained control over the company and the recapitalization has occurred, is to become Realia Business’ stable controlling shareholder and to leverage on its experience within the real estate industry to design a business plan which will maximize value for Realia Business’ shareholders in an environment of gradual improvement of the real estate market.

The capital increase will drastically reduce leverage, reducing the company’s risk and putting it on track towards stable dividend distribution.

Realia will focus on its rental business and will discontinue its promotion business, as previously stated.

As part of its business plan, Hispania intends to transform Realia into a SOCIMI and to maintain it as an independent listed company.

Hispania is counting on Realia’s staff, which will find in Hispania a new stable shareholder, committed with the company’s future and well positioned to lead this new phase.

With this investment in Realia, Hispania will have invested in full the funds raised back in March, in its IPO, having consolidated a first-class portfolio across offices, hotels and residential and it will request from its shareholders an authorisation to raise additional capital in the forthcoming General Extraordinary Meeting.


The news published by the courtesy of Hispania Activos Inmobiliarios.