GTC Falls to 2-Year Low on Rights Issue to Expand in East Europe

Globe Trade Centre SA, Poland’s second-largest property developer, fell to a two-year low on plans to raise capital through a rights issue to fund acquisitions.

The shares slid 4.8 percent to 5.52 zloty, the lowest level since June 2012, with trading volumes seven times the daily three-month average, as of 2:28 p.m in Warsaw. The company has lost 30 percent of its market value this quarter as it reported a ninth consecutive quarterly loss.

GTC plans to sell as many as 140 million new shares to existing stakeholders, a 43 percent increase in stock outstanding, to finance takeovers in Poland and other capitals in central- and southeastern Europe as well as organic growth, it said a statement today. The developer wants to become “a cash generating company in the mid-term,” supervisory board Chairman Alexander Hesse said in the statement.

“Investors are reacting nervously to the company’s plans as this is a huge rights issue and they await more information on planned property takeovers,” Cezary Bernatek, a Warsaw-based analyst at Banco Espirito Santo SA, said by phone.

GTC posted a quarterly loss of 70.1 million euros ($91 million) last month after revaluing properties due to a decline in expected rental values and lack of investors’ interest, the company said at the time. The developer owns office buildings, shopping centers and residential properties in countries from Poland to Hungary and Croatia.

Lone Star

The developer’s biggest single shareholder is Lone Star Funds, a private equity company that invests in real-estate assets, with a 29.9 percent stake, according to data compiled by Bloomberg.

The fund will support the share issuance plan, Malgorzata Czaplicka, head of investor relations at GTC, said in e-mailed response to Bloomberg News questions. Shareholders are scheduled to meet and vote on the offering on Oct. 13. If agreed, the rights issue will take place late this year or in early 2015, according to Czaplicka.

Lone Star has experience with distressed assets and that may offer an area in which GTC can grow, Espirito Santo’s Bernatek said.

“We see acquisition opportunities that can be translated into highly accretive growth,” Hesse said in the statement today.

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