Mountleigh Group, the property to Spanish retailing conglomerate, is raising £96m in a two-for-one rights issue at 25p per share to avert a cash crisis.
The issue is being supported by 22% shareholders Nelson Peltz, Peter May and the Gordon Getty Trust, but new investors are also being called in to underpin the cash call. Hotel Equities Investors, a Bahamian partnership of trusts controlled by the Chicago-based Pritzker family, is subunderwriting 84.2m shares. And Danish-quoted property company Accumulator Invest is on the hook for another 33m.
The rights issue has been forced on the group by its bankers. Mountleigh lost £96m before tax in the year to April and the interest bill on its £600m of borrowings has topped £50m (£33m). The bulk of the loss reflects an £80m write-down on the property portfolio, but operating income is also down. Rents, retailing and property trading brought in a mere £14m (£62m).
To stay afloat the group has had to renegotiate the terms of its loan agreements and Mountleigh’s bankers insisted on more equity to shore up the balance sheet.
That money is coming from chairman Nelson Peltz, joint managing director Peter May and the Getty Trust who together are taking up 94.9m shares (29% of the issue). In addition, the trio are subunderwriting a further 40.8m shares, which could land them with 29% of the company if Mountleigh’s other shareholders decline to participate.
An unusual twist to the subunderwriting arrangements permits Mountleigh to issue extra shares to HEI and Accumulator if all the rights are taken up by existing shareholders. The placing for cash would guarantee HEI 5.9% and Accumulator 5.2% of the company.
- See “Thrills and spills”.
