An activist consortium led by former Unibail-Rodamco-Westfield (URW) CEO Léon Bressler and French telecoms billionaire Xavier Niel has triumphed at URW's combined general meeting, derailing plans for a €3.5 bn capital raise and winning places on the board for the rebel leaders.
Due to the Covid-19 pandemic and French government measures, the general meeting scheduled for 10 November was held remotely, with shareholder voting taking place on the evening of 9 November.
However, the URW board failed to win the two-thirds majority required to greenlight a new share issue as part of its much-heralded Reset plan, while Bressler, Niel and Susana Gallardo were elected to the supervisory board.
Reset plan
The URW-board backed Reset plan proposes completing €4 bn of property disposals by year-end 2021, carrying out a fully underwritten €3.5 bn capital raise, reducing the firm's development and non-essential operating capex by a further €800 mln and limiting cash dividend payments, resulting in €1 bn of savings over the next two years. It had been valued at around €9 bn by the board.
However, the rebel consortium, which raised its combined holding in URW to over 5% last month, managed to pursuade a sufficient number of shareholders that the mooted rights issue was a 'failed strategy'. Although 61.62% of votes were cast in favour, it didn't hit the two-thirds majority required to launch the capital raise.
In October, Bressler and Niel said that the capital raise would be 'devastating' for shareholders and argued that the company should refocus instead on its European prime shopping centre portfolio and sell its US assets. Proceeds should then be used to repay its €24 bn debt load, instead of carrying out a ‘severely dilutive’ rights issue, the consortium said.
Interim URW attempts to gather experts to back its capital raise idea, amid warnings that the rebel consortium's demands would expose URW and its shareholders to 'significant risk', failed to win enough backers as the capital raise was voted down.
High leverage
In the light of the vote against the rights issue, Christophe Cuvillier, group CEO said: 'We take note of the shareholders’ votes expressed in view of the shareholders' general meeting of November 10, notably regarding the proposed capital increase, which did not gather the required two-third majority.
'However, URW's leverage remains high. We will have to review all possible alternatives to rapidly strengthen the group's financial structure,' he warned.
Cuvillier went on to say that the Reset plan was not dead in the water. 'We will of course implement the other components of our Reset plan (asset disposals, reduction of the cash dividend, reduction of capital expenditure) which remain critical to achieve our debt reduction targets.
To this end, the supervisory board will reconvene in the coming days with the newly appointed directors and the management board.'
Analysts in Australia reported that URW shares closed 43% higher overnight on the news.
