FRONT STORY ACCELERATED BOOKBUILDSTwo brave market sell-off
Two ABBs in EMEA tick the right boxes to attract buyers
Two brave sellers executed accelerated
bookbuilds last week, shedding small stakes
in Portuguese utility EDP and South African
gold miner SIBANYE STILLWATER despite
markets falling sharply amid the
coronavirus outbreak.
Bank of America bagged a spot on both sell-
downs, working with BNP Paribas on
state-owned power company China Three
Gorges’ sale in EDP on Wednesday and with
bookrunner Citigroup on the Sibanye sell-
down on Thursday.
A banker involved highlighted the
“horrendous” market backdrop but pointed
out that exposure to gold and blue-chip ESG
companies are assets investors are turning
to as indices tumble and uncertainty grows.
“This is not a larger trend, these two
SELLERSûAREûVERYûCASEûSPECIlCûANDûTHEûVASTû
majority would not be looking to sell in this
market,” he said.
Gold One Group sold 2.7% of Johannesburg-
listed Sibanye Stillwater on Thursday evening,
with the view to paying off a loan, cashing in
around R2.4bn (US$154m).
A speedy turnaround saw wall-crossing
begin at 2pm UK time with the deal launching
after the UK close, about 90 minutes after the
South African exchange closed.A total of 72m shares were sold at R33.60,
a 7.9% discount to Thursday’s close of
R36.50.
The book was around 60 lines and the top
lVEûORDERSûTOOKûMOREûTHANûHALFûTHEûSHARES
Investors were nervous as Thursday
progressed, but the view was that the next
day would be no better for the seller and
with a decent discount the deal would go
through.
While the deal was sold the stock traded
heavier than expected on Friday with shares in
Sibanye Stillwater plunging 13.8% to R33.02.
Gold One Group remains Sibanye’s largest
shareholder with 13.3%. Momentum Securities
was co-bookrunner on the sale
The Sibanye ABB followed a 1.8% sell-
down in Portugal’s EDP on Wednesday that
saw China Three Gorges pick up €293m.
“In this market environment, EDP was
one of the few names and sectors you could
consider,” said a banker that worked on the
trade. “A small-cap stock, illiquid, in the
travel or leisure space, the discussion would
have been short-lived.”
After seeing stocks re-rating throughout
the day, it was felt that there was a good
window for a deal of this size and in this
name and the banks went on risk.Books on EDP opened shortly after the
close, offering 65.82m shares in EDP,
representing a light six or seven days’
trading. Although there was no
wall-cross in advance, there had been
SIGNIlCANTûREVERSEûENQUIRY ûPROVIDINGû
comfort for bookrunners Bank of America
and BNP Paribas.
Pricing at €4.45 per share was a 2.5%
discount to the close. The banker said the
market environment favoured simple
messaging and not pushing too heavily on
pricing.
A book of more than 80 lines was
dominated by UK money and infrastructure
specialists, and inevitably populated by
hedge funds. The top 15 orders took
approximately two-thirds of the trade. A
second banker on the trade said that an ESG
angle for EDP, which retains 83% of EDP
Renovaveis, was helpful in populating the
order book.
EDP shares opened at €4.50 on Thursday,
falling 3.59% on the day to close at €4.402. By
the close on Friday they were €4.22 each.
CTG is left with a 21.5% stake in EDP,
subject to a 120-day lock-up, but said it
intends to remain a long-term shareholder.
Lucy Raitano, Robert VenesIntu loan contingent on £1.3bn rights issue
Shopping centre owner’s market cap has fallen to £150m
Troubled shopping centre operator INTU PROPERTIES
has extended its revolving credit facility to 2024
but its lenders have cut the size to £440m and it
is contingent on the troubled company raising
at least £1.3bn through a rights issue.
The cash call is a massive stretch at more
than eight and a half times the company’s
market cap of £150m on Friday afternoon.
Intu’s already depressed share price fell
7.3% last Wednesday following the news.
The fall accelerated as the week went on,
falling another 7.5% on Thursday and 13.6%
by early afternoon on Friday to 11.07p.
The company has said it will update the
market on the equity fundraising in March
alongside publishing its annual results.
The low share price and massive scale of
the fundraising relative to the marketcapitalisation leaves very little room to set
desirable terms in a rights issue. It is not
possible for the discount to the theoretical
ex-rights price – which is critical to securing
bank underwriting – to be set at more than
9.4%. Achieving that level would require
pricing the new shares at 1p and the rights
issue to be conducted on an eye-watering 96-
for-1 level that would effectively wipe out
non-participating shareholders.
A distressed rights issue would typically
see a discount to TERP in excess of 30%.
/NEûOPTION ûIFû)NTUûCANûlNDûAûWILLINGû
buyer, is to replicate Aston Martin’s strategy
of securing a chunk of the £1.3bn needed at a
price close to the current share price and
then conducting a rights issue in which the
new investor is committed to participate.Intu said late last year that it needed to
raise equity and its shares have fallen
SIGNIlCANTLYûINûTHEûSUBSEQUENTûMONTHS
Intu shares ended 2019 at 34p. Its shares
have been on a downward path since early
2015 when shares traded at about 374p each.
The revised £440m credit facility will
replace a £600m RCF that expires in October
2021.
Bank of America and UBS are corporate brokers
to Intu and Rothschild ISûITSûlNANCIALûADVISER
Two weeks ago Intu said it was talking to Hong
Kong-listed Link REIT about an investment,
leading to a sharp increase in the share price as
THEûlRMûSEEMEDûTOûHAVEûSECUREDûAûLIFELINEû,INKû
said the next day it would not participate and the
shares resumed their precipitous fall.
Lucy Raitano, Owen WildInternational Financing Review February 29 2020 73EQUITIES
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