GTC Slumps as Property Developer Plans Share Sale to Cut Debt

Globe Trade Centre SA, Poland’s second-largest property developer by market value, plunged to a two-month low after announcing plans to sell new shares and cut debt.

The stock declined as much as 5.2 percent and traded 5.1 percent lower at 7.5 zloty as of 12:01 p.m. in Warsaw, valuing the company at 2.4 billion zloty ($792 million). GTC, as the Warsaw-based company is known, has sunk 24 percent this year, compared with a 1.9 percent gain on the WIG-Developers Index.

GTC, which raised 100 million euros from a rights issue last year to repay notes maturing in May, plans to sell as many as 31.9 million shares in a private offering, it said in a regulatory filing on Dec. 13. Its shareholders will vote on the capital increase on Jan. 9.

“It comes as a negative surprise that the company proceeds with a share issuance and the use of the proceeds is designated for debt repayment rather than for new projects,” Malgorzata Kloka, an analyst at UniCredit SpA in Warsaw, said in a note today.

GTC, whose net debt was 947 million euros ($1.3 billion) at the end of September, needs to repay 106 million euros of bonds in April, according to a presentation on its website. Its cash position shrank 53 percent to 103 million euros at the end of September from a year ago.

Based on “the last closing price, the offer could reach as much as 250 million zloty, although we would expect a material discount,” Kloka said. Last month GTC’s management “expressed its confidence in meeting the 2014 repayment schedule as asset disposals were on track and, allegedly, there was a potential for bond refinancing.”

Lone Star Real Estate Fund last month bought a 27.8 percent stake in GTC, which focuses on office buildings, shopping centers and residential properties, from Amsterdam-based Kardan NV (KARD) for 160 million euros.

To contact the reporter on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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