Konzum ups capital for insurance, hotel investments
Holding company Konzum aims to acquire a 24.85% share in insurer CIG Pannónia by raising capital at the insurer through a private placement, Konzum said today. The holding also announced that its board decided to raise equity by HUF 30 billion to HUF 50 bln over a series of transactions, for which it will pay by issuing new shares through a private placement.
Konzumʼs move on CIG Pannónia is pending approval from the insurerʼs shareholders and the National Bank of Hungary (MNB) as market regulator, according to reports by national news agency MTI.
CIG Pannónia plans to issue 23.46 million ordinary shares with a nominal value of HUF 40 by means of a private placement. Konzum will subscribe for the newly issued shares for HUF 350 per share for a total value of HUF 8.21 bln.
Konzum aims to finance the deal with a HUF 4.1 bln loan from Konzum Private Equity (PE) and HUF 4.1 bln of other funds. Konzum will issue 1.36 mln new shares in a private placement at a value of HUF 3,000 per share to Konzum PE to balance the loan. Konzum PE will sell these shares to CIG Pannónia.
By the end of the process, CIG Pannónia will hold a 6.16% stake in Konzum. The insurer said on the Budapest Stock Exchange on Tuesday that it will hold an extraordinary general meeting on January 19, 2018, to approve the transactions necessary for the deal.
In a separate statement, Konzum said it expects the deal to be wound up by March 31, 2018.
Prior to this, by February 28, Konzum will become owner of 18 hotels in Hungary and a further five abroad directly and through its units, according to MTI.
Konzum will pay for the hotel properties and hotel company Hunguest Hotels by issuing new shares through a private placement; its equity is expected to increase by HUF 30 bln, according to preliminary calculations.
Konzum said its board has authorized Konzum PE Private Equity Fund to raise capital in the Konzum holding company through the contribution of a 10% holding in KZBF Invest, a 100% holding in KZH Invest, and a 100% holding in Holiday Resort Kreischberg-Murau GmbH. With the acquisition of KZBF Invest and KZH Invest, Konzum will indirectly acquire Hunguest Hotels, which owns 14 hotels in Hungary, and with the acquisition of Holiday Resort GmbH, it will acquire the Hotel Relax Resort Kreischberg in Austria.
Konzum will issue new shares through a private placement to pay for the assets to Konzum PE. The board set the issue price of the new shares at Mondayʼs closing price of HUF 3,141, MTI reported.
The board also decided that Wellnesshotel Építő will raise capital in the holding company under similar conditions by contributing its four-star Hotel Saliris Resort in Egerszalók (northeast Hungary) and Ferien Hotel (in Murau, Austria). Konzum will issue new shares at a price of HUF 3,141 to pay for the properties.
Furthermore, the board also decided on Tuesday that Konzum will buy Ligetfürdő Kft. from Forrás Nyrt. and Arago Zrt. Ligetfürdő owns the four-star Hotel Forrás and the spa, wellness and aquapark Napfényfürdő Aquapolis (both in Szeged in the south of the country), the four-star Sun Resort in Montenegro, and the Hotel Heiligenblut and Post Hotel in Austria.
Konzum PE will pay with cash and Konzum and Opus Global shares for the almost HUF 14 bln transaction on behalf of the Konzum holding company, and will raise capital in Konzum. Konzum will issue new shares, also at HUF 3,141, to pay for the receivables of Konzum PE. The hotel portfolio directly and indirectly acquired by Konzum will be operated by Hunguest Hotels.
Konzum is directly and indirectly majority owned by the billionaire businessman and investor Lőrinc Mészáros, a close ally of Prime Minister Viktor Orbán and mayor of the latterʼs home village, whose wealth has grown spectacularly since the present government ascended to power in 2010. Businessman Gellért Jászai, who is Konzum chairman and CEO, owns 10.43% of the shares.
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