URW readies for capital increase battle as rebels raise holdings

Unibail-Rodamco-Westfield (URW) is steeling itself for further shareholder dissent over its €9 bn 'Reset' strategy, as it seeks majority consent for a €3.5 bn capital raise. 

The retail property giant has released a recommendation from Proxinvest, an independent proxy advisory firm, backing the capital increase which will be submitted for approval at the company’s extraordinary general meeting on 10 November. URW describes this as 'an essential element' of the group’s proposed restructuring plan, which is seeking to create a capital cushion of up to €9 bn to strengthen its balance sheet and prepare for 'uncertain times' ahead.

The full plan includes completing €4 bn of property disposals by year-end 2021, carrying out a fully underwritten €3.5 bn capital raise, reducing its development and non-essential operating capex by a further €800 mln and limiting cash dividend payments, resulting in €1 bn of savings over the next two years.

URW said that Proxinvest’s support further 'validates the group’s decision to move forward with a prudent and immediate solution to strengthen the group's balance sheet in a volatile and uncertain environment, while preserving the group's flexibility for the future.'

The firm added: 'The implementation of the entire Reset plan is the only responsible proposition to ensure the group’s continued unrestricted access to credit markets in the coming years, and the proposed capital increase is essential to immediately right-size the group’s capital structure.'

Activist opposition
The statement came just days after URW's consortium of rebel shareholders, led by Léon Bressler of Aermont Capital and Xavier Niel of NJJ, revealed that its combined holding in URW had crossed the 5% threshold.

New shares were acquired by Flagship Retail Investment, an investment vehicle of Aermont Capital Real Estate Fund IV SCSp managed by Aermont Capital Management, and by wholly-owned subsidiaries of NJJ Holding, the personal investment vehicle of Niel.

The activist consortium has affirmed its opposition to the €3.5 bn rights issue on multiple occasions, calling the programme ‘a failed strategy’ and saying the capital raise would be ‘devastating’ for shareholders. Ex-Unibail CEO Bressler and Niel want URW to focus on selling its US assets and repaying its €24 bn debt load, instead of carrying out what they call a ‘severely dilutive’ rights issue.

Last week URW said the rebel consortium's demands would expose URW and its shareholders to 'significant risk'.

Colin Dyer, chairman of the supervisory board, declared at the time: 'The activists' proposal involves high risk for the company and its shareholders. Their plan is based exclusively on large and uncertain disposals, with an undetermined time horizon and at uncertain prices.

'They do not take into account the immediate need to strengthen our balance sheet. We are fully aware of the efforts we are asking of our shareholders, but our Reset plan is realistic and concrete. It offers an immediate solution to strengthen the group's balance sheet in a volatile and uncertain environment, while preserving the group's flexibility for the future.'

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