FINANCE: Lux Starlight has agreed terms for a recommended cash offer for the Guernsey-based investor Tamar European Industrial Fund as part of a new €500m European industrial venture.
Lux Starlight is a Luxembourg-based vehicle wholly owned by SOF-IX International Holdings, a fund managed by US-based private equity firm Starwood.
Starlight has been set up to form a new joint venture – named MStar Europe – targeting €500m of European industrial assets, between funds managed by Starwood, Starwood Fund IX and M7 Real Estate.
The Starlight jv will predominantly invest in light industrial assets in Germany, the Netherlands and France. MStar Europe will be the second jv between Starwood and M7, following the launch of the UK-focused MStar in June 2013.
Starlight will offer £0.38 in cash per TEIF share, valuing the firm at approximately £54m. The offer will cover all issued TEIF shares, and represents a premium of 7.7%. The shares will be acquired fully paid and free form all liens, equities, charges and encumbrances.
It will remain open for 31 days.
Starlight has received an irrevocable undertaking and a letter of intent to accept the offer for 60.5m TEIF shares, representing 43% of the firm.
The undertakings are from Weiss Asset Management, acting as investment manager to Brookdale International Partners and Brookdale Global Opportunity Fund, covering 19m shares.
Meanwhile, Laxey Partners issued the letter of intent, covering 41.7m shares.
London-lsited TEIF predominantly focuses on industrial assets in Western Europe, excluding the UK and Nordic area. It was incorporated in 2006.
Lux Starlight is currently owned by Starwood fund IX, but it is expected that M7 and affiliates will acquire a minority, non-controlling and indirect interest in the vehicle through the MStar Europe jv prior to publication of the cash offer.
TEIF has been disposing its remaining assets in the short term since 2011. It has outstanding debt facilities of €67m due for repayment in July 2015 and October 2016. The group considers that as the number of assets in the portfolio reduces the costs of running the firm and maintaining its listing will become inefficient.
The board of TEIF intend to unanimously recommend the offer to the firm’s shareholders. The offer is to be financed by existing financial resources controlled by Lux Starlight.
As of 31 December 2013, total assets less liabilities controlled by TEIF stood at £144m, with shareholders funds of £73m.
Stralight intends to replace current investment manager Patrizia Financial Services with M7 Real Estate or an affiliate. It does not intend to change TEIF’s investment strategy, placfe of business or fixed assets. TEIF will be withdrawn from the London Stock Exchange after the offer becomes unconditional.
JP Morgan Cazenove and BDO advise TEIF. Oriel Securities advises Lux Starlight.
chris.berkin@estatesgazette.com
