Jelmoli gets backing to create separate listed real estate unit

Swiss retail group Jelmoli has received backing from its principal shareholder, Pelham Investments, to create separate real estate and investment companies. The new companies will be listed on the Swiss Stock Exchange.

The investment company will have its headquarters in Switzerland and while its investment strategy has yet to be finalised, Jelmoli said the expected focus will be on opportunities with return profiles that are not as easily accessible for public investors. The real estate company will have a conservative capital structure with a loan-to-value ratio in the range of 40% to 50%.

The split is expected to occur through a tax-neutral share distribution with shareholders then having shares of both companies. Shareholder approval is required before the split can be finalised. An extraordinary general meeting is expected to be held in the third quarter of this year and a simple majority would decide. A review of the tax, legal and financial aspects of the transaction must also be completed for the split to take place.

Discussions with shareholders continue in regard to the strategy's second step, the unification of the current dual class share structure in the real estate company. This step would require Pelham Investments to give up its voting majority in exchange for an appropriate reverse premium. An extraordinary meeting will be held to receive shareholders approval of the unification once the first step is approved. Jelmoli projects step one and step two to potentially be completed by early 2009.