Konzum to acquire hotels in Hungary and Austria

Deals

The board of listed holding company Konzum has approved the acquisition of a spa in Egerszalók (NE Hungary) and two hotels in the Austrian ski center of Kreischberg, in exchange for privately placed new shares in the second step of a planned HUF 30 billion capital raise, Konzum said on the website of the Budapest Stock Exchange.

The Saliris Resort in Egerszalók, with distinctive travertine cascades in the foreground.

Konzumʼs capital will be raised by the private placement of 1,137,090 new shares in exchange for in-kind contributions worth a total of HUF 3.571 billion. The number of Konzum shares will thus rise to 27,143,506, national news agency MTI reported.

The contributions come from - and the new shares will be subscribed by - Wellnesshotel Építő Kft. and Konzum PE Private Equity Fund, which, similarly to Konzum, belong to the group of companies controlled by the investor Lőrinc Mészáros, a figure known to be close to the government and Prime Minister Viktor Orbán. According to public records, Mészáros also holds a "qualified majority influence" in Wellnesshotel Építő.

The new shares will be issued at HUF 3,141 per share, or at the stock exchange closing price on December 11, 2017. Konzumʼs shares, which have a face value of HUF 25, closed at HUF 2,885 on Tuesday.

In the transaction, Wellnesshotel Építő will get new shares for the HUF 2.674 bln due from Konzum as the sale price of the four-star Egerszalók Saliris Resort (HUF 2.4 bln) and the four-star Hotel Alpenblick Kreischberg (HUF 274.5 million). Additionally, Konzum PE Private Equity Fund will hand over as an in-kind contribution to Konzum its 100% stake in Holiday Resort Kreischberg-Murau Gmbh, for HUF 897.1 mln.

Konzum announced in December that it would raise capital through a series of transactions by which the firm would acquire 18 Hungarian and five foreign hotels. The transactions would raise Konzumʼs net assets by about HUF 30 bln to HUF 50 bln in several steps.

In the first step of the capital raise, announced in February, Konzumʼs capital rose through the in-kind contribution of a 71.5% stake in Hunguest Hotels, with a net asset value of HUF 16.2 bln. The transaction raised Konzumʼs stake in Hunguest Hotels to 99.99%.

As of February 28, Konzum PE Private Equity Fund was Konzumʼs biggest shareholder, holding 40.3% of the shares, followed by Mészáros (19.57%), Gellért Jászai (10.43%), and CB Germany Branch (6.18%), MTI noted.

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