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Citycon Oyj, a leading owner and developer of shopping centres in the Nordic and the Baltic countries, is raising approximately EUR 400 million of new capital of which approximately EUR 200 million will be raised through a directed share issue to CPP Investment Board European Holdings S.ar.l ("CPPIBEH"), a wholly-owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"), an investment management organization investing the funds of the Canada Pension Plan. Upon closing of the directed share issue, CPPIBEH will become a significant strategic shareholder in Citycon with an ownership interest representing 15 per cent of the shares and voting rights in Citycon. The transaction is conditional on the receipt of necessary authorizations at the extraordinary general meeting of Citycon shareholders (EGM) to be held in June 2014.
Subsequent to the directed share issue, a rights issue of approximately EUR 200 million is being offered to Citycon's shareholders. The subscription price will be the same in both share issues: EUR 2.65 per share, approximately 2.2 per cent lower than the closing price of Citycon's share on 12 May 2014 and approximately 1.7 per cent higher than the dividend adjusted volume-weighted average trading price of its share on NASDAQ OMX Helsinki Ltd. during the preceding three months. Gazit-Globe and CPPIBEH together with Ilmarinen Mutual Pension Insurance Company, have undertaken, subject to certain conditions, to subscribe for their respective pro rata entitlement in the rights issue. In addition, Gazit-Globe and CPPIBEH together will fully underwrite the rights issue, subject to certain conditions.
Citycon will use the proceeds of the directed share issue and rights issue to make an approximately EUR 300 million debt repayment, thereby further deleveraging the company's balance sheet and giving it the freedom to recycle capital accretively by pursuing select acquisitions and (re)development projects of supermarket-anchored shopping centres in dense urban locations in the Nordic and Baltic regions. As part of the transaction, two new board members nominated by CPPIBEH are proposed to replace two existing members on Citycon's Board of Directors.
This is the second transaction between CPPIB and Citycon, which first joined forces in December 2012 to acquire Kista Galleria, one of the largest and most successful shopping centres in the Stockholm area. The property value in that deal was approximately EUR 530 million.
Graeme Eadie, Senior Vice-President, Real Estate Investments, CPPIB: "This investment enables us to expand our retail platform in the Nordic region which continues to be an attractive retail market. Citycon is one of the leading retail owner/operators in the Nordics whom we know well through our joint ownership in Kista Galleria. We look forward to expanding our partnership with Citycon, and its major shareholder Gazit-Globe, as they continue to grow the business."
Marcel Kokkeel, Citycon Oyj's CEO: "We are pleased to receive another globally recognized real estate investor as one of Citycon's strategic shareholders. This will further enhance our profile as one of the shopping centre industry leaders and further strengthen our financing position. We appreciate the commitment that our major shareholders Gazit-Globe and Ilmarinen have given to the transaction."
Chaim Katzman, Chairman of Citycon and Gazit-Globe Ltd.: "This is a vote of confidence in Citycon by CPPIB, which is one of the world's largest investment funds with global real estate assets of over US$20 billion. The investment signals CPPIB's recognition of the ability of Citycon's management to navigate the long-term strategic growth of Nordic and Baltic shopping centres."
Keywords for this news article include: Real Estate, Financial Services.
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