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2007-12-04 17:44:23 CET 2007-12-04 17:44:23 CET REGULATED INFORMATION FL GROUP hf. - Company AnnouncementFL Group increases equity by up to ISK 64 billion, reaching ISK 180 billion in total equity- Investments in dynamic property companies - - Total value of the combined investment is ISK 53.8 billion - - Refinancing and share issue strengthens financial position substantially - - Streamlining of operations by closing down Copenhagen offices - Reykjavik, Iceland, 4 December, 2007. FL Group (OMX: FL), the international investment company, announced today that it has made significant investments in major property companies, through its acquisition of Baugur Group's property holdings. FL Group has increased its stake in Landic Property from 2.9% to 39.8%, acquired a 32.3% holding in Fasteignafelag Islands, a 49.7% holding in Thyrping, a 22.7% holding in Eik property company, and has acquired holdings in a number of international property funds. The investments will be fully financed through the issuance of new shares in FL Group at ISK 14.7 per share. In light of the size of the share issue and current market conditions FL Group's Board of Directors concluded that the issuance of new shares should be at a price lower than current market price. Additionally it has been decided to offer new shares to institutional investors and shareholders through a rights issue at the same price. FL Group and Landic Property have signed a letter of intent, whereby Landic Property will acquire some of the abovementioned assets from FL Group, primarily the holdings in international property funds. The assets transferred will provide Landic Property with an opportunity to increase its geographic presence. FL Group believes that Landic Property is well positioned to increase the value of these assets. Total value of this transaction is ISK 13.7 billion. Good addition to the company's portfolio Following today's announcement, FL Group's property portfolio in Europe has total assets of ISK 574 billion (EUR 6.4 billion) and totals 3.3 million square meters of rental space and more than 4,000 tenants. Landic Property is a major Nordic property company with over 500 properties in Denmark, Sweden, Finland and Iceland, and has total assets of approximately ISK 447.3 billion (EUR 5.0 billion). Thyrping, Fasteignafelag Islands and Eik property company are all leading companies within their respective field domestically and have total combined assets of approximately ISK 30 billion (EUR 340 million). The acquired interests will sit within the Private Equity division and complement FL Group's existing property investments with U.S. based Bayrock Group and Eik property company. The abovementioned investments are in line with the Group's strategy to continue to strengthen its Private Equity division through investments in companies with strong cash flows, good growth potential and experienced management teams. In addition a decision has been made to close down the company's office in Denmark where five employees are located. The office's operations will be merged with the London operations which will streamline operations and reduce operating costs. Jon Sigurdsson, Chief Executive Officer of FL Group said: “This transaction complements our existing investments in property and diversifies our private equity investments across a broad range of sectors. For some time it has been our strategy to increase our private equity holdings, particularly in the property sector; these investments present an excellent opportunity as they deliver the right balance of strong cash flows and growth opportunities, have significant upside potential and have interesting projects in the pipeline. These companies have generated outstanding financial results in the past and we are excited by the opportunities for future growth in the sector. In order to generate maximum value, we intend to sell FL Group's complementary property assets to Landic Property and will manage the retained property companies within FL Group's private equity division going forward. Our fundamentals are strong, and today's announced financing transactions only further enhance our position for future growth.” Gunnar Sigurdsson, CEO of Baugur Group added: “The sale of our property portfolio brings clear differentiation between our retail and property portfolios. This is a key part of Baugur's strategic development to concentrate on our retail portfolio and the international expansion that we announced earlier in the year.“ Funding and financial implications In relation to the ISK 53.8 transaction FL Group will issue 3,659 million new shares at the price of ISK 14.7. The shares will be issued to Baugur Group in exchange for the abovementioned assets. The transaction is dependent on due diligence and the approval of shareholders at a shareholders' meeting which will be called in December 2007. In addition, FL Group will offer new equity worth ISK 10 billion to institutional investors at the same price. If the demand in the share issue is higher, Baugur Group has committed to sell up to ISK 5 billion of their stake in FL Group potentially making the total offering ISK 15 billion in value, at ISK 14.7 per share, which will be arranged by Kaupthing bank. FL Group intends to issue additional shares through a rights issue to shareholders at the price of ISK 14.7 per share, a total amount of ISK 3 billion in value. New shares will be offered to shareholders in proportion to their shareholdings at the beginning the subscription period. Baugur Group has committed not to participate in the offering. FL Group will therefore increase its share capital by ISK 4,544 million, which represents an increase of 49%. After the issue of shares and sale of shares to institutional investors, Baugur Group will have increased its holdings in FL Group from 17.7% to 35.9% and in turn will become the company´s largest shareholder. FL Group has received commitments for ISK 45 billion of long-term financing which will be finalized during the next few days. A part of the financing will be used to repay the Company's short-term debt. After the issue of the shares, the long-term financing and repayment of short-term debt, the Company's financial position is significantly stronger than before. Total equity will amount to around ISK 180 billion with an equity ratio of 41%, on a consolidated basis, including the balance sheet of Tryggingamidstodin. If the transactions complete the Company's liquidity increases substantially and cash and cash equivalents will amount to around ISK 35 billion, which gives good flexibility for current operations and to meet potential market volatility. Fairness opinion Kaupthing Bank has provided a fairness opinion to FL Group on the methodology used to value the assets within the portfolio. The conclusion from Kaupthing is that the valuation analysis has been carried out using reasonable assumptions and the purchase price is fair in current market conditions. Investor presentation Fl Group will hold an investor presentation on 5 December, 2007, at the Nordica Hilton Hotel in Reykjavik. The presentation will begin at 08:30 and will provide further information on today's announcement. The presentation and today's press release will be available on the company´s Web site, www.flgroup.is. For further information: FL Group Halldor Kristmannsson Managing Director of Corporate Communications and IR Tel: (+354) 591 4400 / 669 4476 E-mail: halldor@flgroup.is About FL Group FL Group is an international investment company focusing on three areas of investment, Financial and Insurance (FIG), Private Equity and Capital Markets. FIG is a special investment function responsible for strategic investments in banking, insurance and other financials. Private Equity oversees FL Group‘s private equity holdings in addition to some listed positions that fit specific investment criteria. The company's Capital Markets function oversees investments in listed securities as well as derivatives and other alternative trading for hedging or investment purposes. With head office in Reykjavik and offices in London and Copenhagen, FL Group invests in companies worldwide. The Company is listed on the OMX Nordic Exchange in Reykjavik, Iceland (OMX: FL), with over 4.000 shareholders. More information on www.flgroup.is Notes to editors FL Group's property overview Following today's announcement, FL Group's property portfolio in Europe has total assets of ISK 574 billion (EUR 6.4 billion) and totals 3.3 million square meters of rental space, more than 4.000 tenants. In addition to this are property funds holding total assets of about ISK 116 billion (EUR 1,6 billion) The investments are an excellent addition to a current partnership in the U.S. with Bayrock Group LLC, with whom FL Group has jointly invested in five high profile real estate development projects across the United States. Landic Property (www.landicproperty.com) Landic property is one of the three largest property companies in the Nordic region. It was established in 2007, after the former Stodir Real Estate acquired the Danish property company Keops. Landic Property has over 500 properties in Denmark, Sweden, Finland and Iceland. The company leases over 2.8 million square meters of property to over 3,800 lessees. The company´s total assets are approximately EUR 5 billion. Estimated profit before tax is EUR 27 million. The revenue stream is well balanced and solid coming from four Nordic countries. FL Group acquires 38.9% stake in Landic property. |
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