Citycon Oyj (CTY1S), a Finnish owner of shopping malls, plans to sell shares for about 400 million euros ($550 million) to repay debt and fund acquisitions.
Citycon priced the shares at 2.65 euros apiece, the Helsinki-based company said today in a statement. The Canada Pension Plan Investment Board will invest about 206.4 million euros, and shareholders will be offered a chance to buy 196.5 million euros in stock in a fully underwritten rights issue.
“We want to expand in Finland, Sweden and Estonia, and Denmark on a small scale,” Aharon Soffer, chief executive officer of Gazit-Globe Ltd. (GZT), Citycon’s largest stakeholder, said by phone. “The risk versus reward makes lots of sense for us.”
The shopping-mall owner partnered with the Canada pension board in 2012 in a 4.6 billion-krona ($700 million) deal to buy Kista Galleria, outside Stockholm. The Canadian investor will hold about 15 percent of Citycon shares after the issue, and the sale to shareholders will represent about 12.5 percent of the stock after the transactions.
Citycon said it will use the proceeds to repay about 300 million euros of debt, giving it “freedom to recycle capital accretively by pursuing select acquisitions” and development projects. Chaim Katzman, chairman of Gazit-Globe and Citycon, said in March last year that the company’s Nordic expansion was being curbed by a lack of acquisition targets.
“The addition of a globally recognized real estate investor as one of its strategic shareholders will also increase Citycon’s profile as a shopping-center industry leader, which should enhance the company’s attractiveness to investors,” it said.
Gazit-Globe owns 49.3 percent of Citycon shares. The Tel Aviv-based company will subscribe to the rights issue, along with Ilmarinen Mutual Pension Insurance Co., Citycon’s second-largest shareholder, the Finnish company said. Gazit-Globe’s stake may decline to as low as 42 percent after the rights offering, depending on other shareholders, according to CEO Soffer.
The stock declined 0.7 percent to 2.69 euros at 4:15 p.m. in Helsinki. That pared the gain this year to 10 percent.
The company has about 2.15 billion euros of outstanding bonds, term loans and revolving credit facilities, including interest, through 2020, according to data compiled by Bloomberg.
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