NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, HONG KONG, SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.
Citycon Oyj (“Citycon” or the “Company”) and CPP Investment Board European Holdings S.àr.l (“CPPIBEH”), a wholly owned subsidiary of Canada Pension Plan Investment Board (an investment management organisation investing the funds of the Canada Pension Plan), have on 12 May 2014 entered into an agreement (the “Agreement”) on an overall arrangement whereby Citycon would strengthen its balance sheet by raising approximately EUR 400 million of new capital and CPPIBEH would become a significant strategic shareholder in Citycon. The proposed arrangement consists of a directed share issue of approximately EUR 206.4 million to CPPIBEH (the “Directed Share Issue”) as well as a subsequent fully underwritten rights issue of approximately EUR 196.5 million (the “Rights Issue”) pursuant to the pre-emptive subscription right of the Company’s shareholders (together the “Transaction”). The Transaction is conditional on the granting of necessary authorisations and election of new Board members by an Extraordinary General Meeting (“EGM”) of Citycon. The Company’s two largest shareholders, Gazit-Globe Ltd. (“Gazit”) and Ilmarinen Mutual Pension Insurance Company (“Ilmarinen”), have undertaken to support the granting of such authorisations at the EGM.
The new shares to be issued to CPPIBEH in the Directed Share Issue would represent approximately 15.0 per cent of the shares and voting rights in the Company after the Directed Share Issue. The new shares to be issued in the Rights Issue would represent approximately 12.5 per cent of the shares and voting rights in the Company after the Directed Share Issue and the Rights Issue, assuming that the Rights Issue is subscribed in full. The subscription price would be the same in both the Directed Share Issue and the Rights Issue, i.e. EUR 2.65 per share. The subscription price has been agreed in negotiations between CPPIBEH and the Company and the Company believes that it represents a fair price in light of other equity issues in the real estate sector in Europe in the past and reflects the historical average trading prices of the Company over the last six (6) months. The subscription price is approximately 2.2 per cent lower than the closing price of the Company’s share on 12 May 2014 and approximately 1.7 per cent higher than the dividend adjusted volume-weighted average trading price of the Company’s share on NASDAQ OMX Helsinki Ltd. during the preceding three (3) months.
Gazit and CPPIBEH together with Ilmarinen have undertaken, subject to certain conditions, to subscribe to their respective pro rata entitlement of the new shares to be issued in the Rights Issue. After the Directed Share Issue, Gazit would own approximately 41.9 per cent and Ilmarinen approximately 7.6 per cent of the shares and voting rights in the Company. Thus, the subscription undertakings by CPPIBEH, Gazit and Ilmarinen represent in the aggregate approximately 64.5 per cent of the maximum number of new shares to be issued in the Rights Issue. In addition, Gazit and CPPIBEH have provided underwriting commitments according to which they commit, subject to certain conditions, to underwrite the Rights Issue up to an aggregate amount of EUR 42.6 million and EUR 27.1 million, respectively (less the subscription amount for any new shares potentially subscribed for in the secondary subscription). The underwriting by CPPIBEH will only apply to new shares to be issued in the Rights Issue that may remain unsubscribed for after the underwriting commitment provided by Gazit has been used in full. With the above subscription and underwriting commitments, the Rights Issue is fully underwritten.
The obligations of CPPIBEH under the Agreement are subject to certain conditions, including no material adverse change related to Citycon and the validity of certain representations and warranties relating, among other things, to disclosure and the financial condition of Citycon. In relation to the Directed Share Issue, the Agreement includes certain indemnification undertakings in the event of a qualified breach of Citycon’s representations and warranties, in which case Citycon would have an obligation to indemnify, to the extent and in an amount lawful under the Finnish Companies Act, CPPIBEH against damages (as defined in the Finnish Securities Markets Act) resulting from such breach in certain situations, however, always up to a maximum amount corresponding to CPPIBEH’s total investment in the Directed Share Issue.
As part of the overall Transaction, CPPIBEH and Gazit have on 12 May 2014 also entered into an agreement documenting the parties’ objectives in certain governance matters relating to the Company. Under the agreement, two new Board members shall be nominated by CPPIBEH to the Board of Directors of Citycon to replace two existing members conditional upon the completion of the Directed Share Issue. One of such Board members will be independent of both CPPIBEH and Citycon. The main contents of the agreement will be published through a separate stock exchange release today.
The Company would use the proceeds of the Directed Share Issue and Rights Issue to make an approximately EUR 300 million debt repayment thereby further deleveraging the Company’s balance sheet and giving it the freedom to recycle capital accretively by pursuing select acquisitions and (re)development projects of supermarket-anchored shopping centres in dense urban locations in the Nordic and Baltic regions as well as proactive asset management and other value-added activities. The Directed Share Issue would enable the Company to raise large amount of equity capital within a short timeframe and on terms deemed more favourable than those which might have been achieved through a standard equity issue. The Company believes that the addition of a globally recognised real estate investor as one of its strategic shareholders will also increase Citycon’s profile as a shopping centre industry leader, which should enhance the Company’s attractiveness to investors. In addition, the agreement between CPPIBEH and Gazit should further enhance the Company’s corporate governance structure to reflect the highest international market standards. There are, therefore, weighty financial reasons from the Company’s perspective for deviating from the pre-emptive subscription rights of the shareholders in the Directed Share Issue. In addition, the Company’s shareholders are offered the possibility to invest in the Company at the same subscription price through the subsequent Rights Issue.
The Board of Directors will separately convene an EGM to be held early June 2014 to decide on the necessary authorisations and appointment of Board members. The Board will decide on the detailed terms and conditions of the Directed Share Issue and the Rights Issue pursuant to the Agreement provided that the EGM will grant the necessary authorisations. The Directed Share Issue is expected to be executed soon after the EGM and the subscription period of the Rights Issue is expected to begin in mid-June 2014.
Goldman Sachs International is acting as the Company’s financial advisor in connection with the strategic investment by CPPIBEH and Roschier, Attorneys Ltd. as its legal advisor in connection with the Transaction. Pohjola Bank plc has committed to act as the Lead Manager of the proposed Rights Issue. J.P. Morgan is acting as CPPIBEH’s financial advisor and Hannes Snellman Attorneys Ltd as its legal advisor in connection with the Transaction.
Citycon arranges a conference call in English for analysts and investors today, 13 May 2014, starting at 11:30 EET. You can watch the audiocast at: http://wms.magneetto.com/citycon/2014_0513_info/view
Helsinki, 13 May 2014
CITYCON OYJ
Board of Directors
For further information, please contact:
Marcel Kokkeel, CEO
Tel. +358 20 766 4465
marcel.kokkeel@citycon.com
Eero Sihvonen, Executive VP and CFO
Tel +358 20 766 4459
eero.sihvonen@citycon.com
Distribution:
NASDAQ OMX Helsinki
Major media
www.citycon.com
DISCLAIMER
This stock exchange release is not an offer for subscription for shares in the Company. A Finnish prospectus relating to the rights issue referred to in this stock exchange release and the subsequent listing of the new shares at NASDAQ OMX Helsinki Ltd. will be prepared and filed with the Finnish Financial Supervisory Authority provided that the rights issue will be carried out.
In particular, the information contained herein is not for publication or distribution, directly or indirectly, in or into the United States, Canada, Australia, Hong Kong, South Africa or Japan, unless the Company in its sole discretion determines otherwise. These written materials do not constitute an offer of securities for sale in the United States, nor may the securities be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder. The Company does not intend to register any portion of the offering in the United States or to conduct a public offering of securities in the United States.
The issue, exercise and/or sale of securities in the offering are subject to specific legal or regulatory restrictions in certain jurisdictions. The Company and Pohjola Bank plc assume no responsibility in the event there is a violation by any person of such restrictions. Pohjola Bank plc is acting exclusively for the Company and no one else in connection with the rights issue and will not regard any other person (whether or not a recipient of this presentation) as its client in relation thereto and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for giving advice in relation to the rights issue or any arrangement referred to herein.
The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. Investors must neither accept any offer for, nor acquire, any securities to which this document refers, unless they do so on the basis of the information contained in the applicable prospectus published or offering circular distributed by the Company.
The Company has not authorized any offer to the public of securities in any Member State of the European Economic Area other than Finland. With respect to each Member State of the European Economic Area other than Finland and which has implemented the Prospectus Directive (each, a “Relevant Member State”), no action has been undertaken or will be undertaken to make an offer to the public of securities requiring publication of a prospectus in any Relevant Member State. As a result, the securities may only be offered in Relevant Member States (a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; or (b) in any other circumstances falling within Article 3(2) of the Prospectus Directive. For the purposes of this paragraph, the expression an “offer of securities to the public” means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to exercise, purchase or subscribe the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
This communication is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as “relevant persons”). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.