Italy's Prelios agrees restructuring

Italian listed property services firm Prelios is moving forward with a debt restructuring plan and capital increase aimed at strengthening its equity base.

The Milan-based real estate firm, which has been posting losses for the past five years, has approved plans to carry out a €185 mln capital hike which will be partly reserved by businessman Massimo Caputi’s Feidos and its investment partners.

As part of the capital increase, Prelios will receive at least €100 mln in cash, with the rest coming from the conversion into equity of debt granted by a club of banks including Unicredit and Intesa Sanpaolo.

Caputi's Feidos and its investment partners, through a new vehicle known as Feidos 11, have committed to subscribe around €20 mln worth of Prelios shares, which will not hold voting rights for the first three years. Parent group Pirelli & C. will contribute €23 mln of equity while banks Intesa Sanpaolo and UniCredit have agreed to provide a further €27 mln.

The remainder of the capital increase, a total of €115 mln, will be partly reserved by the group's major shareholders while €90 mln will be offered to the market with a guarantee from shareholders that they will subscribe to the shares proportionately to their rights in the event there is no interest from other parties.

The operation is subject to a number of conditions including the approval at the shareholders meeting planned for 8 May. If approved, the capital increase will start to be implemented in June.

The agreement also includes the restructuring of €561 mln of debt partly provided by Pirelli and partly by a consortium of banks including Unicredit and Intesa Sanpaolo. The loans, which were initially due to mature in 2014 and in 2016, were restructured into €519 mln worth of new loans with a five-, six- and seven-year maturity.

Prelios, which was spun off from Pirelli two years ago, posted a net loss of €242 mln in 2012, compared to a loss of €290 mln in 2011, as a result of real estate writedowns and restructuring costs.

The group saw its revenue shrink to €131 mln last year, versus €178 mln a year before. Its management platform revenues - Prelios’ core business - fell to €125 mln from €150 in the same period in 2011.

The company's operating result stood at a negative €72 mln largely due to impairment losses on the firm’s non-performing loan portfolio.

Assets under management amounted to €9.7 bn at year-end 2012, compared to €12.4 bn in 2011. The net financial position amounted to a negative €520.5 mln from a negative €488 mln in 2011.

In its 2012 financial results, Prelios reiterated its previous strategy of focusing on the provision of asset and property management services for third parties and the progressive disposal of its co-investment activities.

The company said, however, that Germany will remain a key component of the business, contrary to earlier plans to refocus exclusively on activities at home.