The German government plans to press forward with the contested takeover of ailing property financier Hypo Real Estate by fully subscribing to a capital increase which would give it a 90% stake in the bank.
The German government plans to press forward with the contested takeover of ailing property financier Hypo Real Estate by fully subscribing to a capital increase which would give it a 90% stake in the bank.
The details of the capital increase were revealed in a joint statement issued on Friday by the supervisory and management boards of the Hypo Real Estate Group. The statement urged all shareholders to accept the government's takeover of the bank.
Hypo Real Estate is to hold an extraordinary general meeting on 2 June to seek shareholder approval for the proposal to increase the group's share capital by around EUR 5.64 bn to EUR 6.33 bn from the current level of EUR 693.3 mln.
This will be carried out by issuing up to 1.88 billion new no-par value bearer shares at the lowest price, which is the nominal value of EUR 3 a share. If shareholders back the plan, the government - via the German bank stabilisation fund Soffin - will obtain a 90% stake in Hypo Real Estate.
The capital increase is intended to break shareholder opposition to the Federal Government takeover of the bank.
Earlier this month, Soffin tabled a EUR 1.39 per share offer for all of Hypo's shares the government did not already own. The acceptance period runs until 4 May. But as the offer is only a 10% premium on the statutory minimum offer price of EUR 1.26, key shareholders such as hedge fund manager Exchange Investors and a consortium led by JC Flowers were holding out in a bid to force an increase in the offer.
