Lone Star Bids $190 Million for GTC Stake Before Share Sale

Lone Star Funds offered 717.9 million zloty ($190 million) to raise its stake in Globe Trade Centre SA and help the Polish property developer secure approval of its capital increase plans. GTC shares jumped the most in six years.

Lone Star, which bought 32.5 percent in GTC in 2013, plans to buy 117.7 million shares for as much as 6.1 zloty each to boost its holding to 66 percent, it said in an e-mailed statement on Monday. The bid is subject to GTC gaining shareholders’ approval of its rights issue plan at a meeting on April 23. GTC management failed to secure sufficient support to raise capital for expansion at a meeting in October.

The U.S.-based fund is seeking to tighten its grip on Poland’s second-largest developer after Oaktree Capital Group and Pacific Investment Management Co. agreed to buy a 42 percent stake in GTC’s bigger competitor Echo Investment SA from Polish billionaire Michal Solowow this year. Lone Star supports GTC’s strategy to expand in Poland as well as in Hungary, Romania and Serbia, where it sees “significant growth potential,” it said in the statement.

GTC shares soared as much as 13.3 percent, the biggest gain since June 2009, and traded 12.7 percent higher at 5.51 zloty as of 4:17 p.m. in Warsaw.

Takeover Targets

Lone Star offered to pay 6.1 zloty for GTC shares from May 18 to May 22 and 5.5 zloty for the remainder of its public bid, which ends on June 3. The fund plans to keep GTC listed on the Warsaw bourse and the bid will be effective if Lone Star reaches a 50.1 percent threshold.

GTC plans to sell 140 million shares at a minimum of 4.2 zloty each in a rights issue, it said in a regulatory statement on March 27. Lone Star’s bid “gives an exit option” to those shareholders that don’t back GTC’s plans, the fund said.

The company plans to publish a share sale prospectus and set the issue price in June, it said in a presentation on its website on Monday. GTC has selected “five most interesting” takeover targets in Warsaw, Budapest and Bucharest, with a combined value of about 190 million euros ($206 million).

The developer plans to spend 78 million euros of proceeds from the share sale on acquisitions and 60 million euros on financing its existing projects, according to the presentation.

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