Monday, March 4, 2019

Fridman officializes his OPA on Dia and tacha of "uncertain" the capital increase of the council

Fridman officializes his OPA on Dia and tacha of "uncertain" the capital increase of the council

He complains that he will dilute by 90% the value of the participations that do not go to it and defends that his proposal allows to negotiate better with the creditor bank

  The Russian tycoon Mikhail Fridman , who controls the company with the most important participation in the commercial distribution company Dia ( LetterOne with 29%), made official this Thursday before the National Securities Market Commission (CNMV) his takeover bid ( OPA) about 70% of the titles it does not have, although its objective only happens to reach a majority of command. For this reason, it establishes the condition of obtaining the support of a minimum of 35.5%, in addition to not having a previous capital increase and reaching an agreement with the bank to refinance the debt, given that the latter has signed "exchange clauses" of control "that would allow you to suspend your commitments and be more severe if you change the current address of the company.

  These Russian investors have a guarantee from the Swiss bank UBS for at least 296 million euros. His proposal, advanced on the 5th day, supposes 67 cents per title and they do not plan to raise it. There are five more than its last closing -the firm has revalued 44% in these weeks-, although then it improved by 52.5% the weighted average price per volume of the last month.

With the numbers of Fridman and LetterOne, Dia would be worth 417 million, a very low figure in the opinion of the board of directors , which has called an extraordinary meeting on March 20 to increase capital by 600 million. If successful, the Russian tycoon offers to do the same but for 500 million and crosses out the proposal of the current direction of "uncertain and very dilutive" for the partners, given that by resorting to a previous operation 'accordion' (first reduce the nominal value of the action) those who do not go to its expansion would lose almost 90% of the money invested (they would be the same titles but they would represent much less social capital).

Possible dissolution

Within the negotiation that wants to open with the financial entities Fridman does not contemplate a withdrawal, knowing that it would be rejected outright by the bank , but neither accepts that the money of the expansion is dedicated to reduce liabilities nor what is obtained with the sale of assets ( Clarel perfumeries and Max Discount stores ). Understand that this money should be dedicated to strengthen the box-to pay suppliers, for example, and also their assets against the risk of a bankruptcy , in addition to enhancing investments to recover the business.

What it does want is to extend the debt maturities until the end of March 2023 and eliminate penalty clauses, as well as receive new short-term liquidity lines and financing for its strategic plan. And is that according to a report by Morgan Stanley if there is no capital increase, the supermarket chain would be doomed to request "the judicial dissolution within two months from the meeting of shareholders ."

This investment bank opts a priori for the proposal promoted by the board, although it does not rule out other operations (for example, Fridman's, although not the appointment) "that would allow the legal cause of dissolution in which the company is incurred to be removed" . And is that after the losses of 352.6 million euros suffered in 2018 the net equity of Dia throws a negative figure of 98.82 million, which would be in a situation of technical bankruptcy . That is why the main recommendation of different independent advisers is the need to obtain new revenues and in significant volume in a short time.

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