We missed this little piece of news from the beginning of the week. It seems Mr Vitek is making quite the property play this year. Along with a suspected fight for control of Orco, the Czech billionaire increased his holding in the developer Ablon near the beginning of the month to 15.52%, before taking an even bigger slice:
ABLON Group Limited (“ABLON” or the “Company”), a leading real estate owner and developer in Central Europe, was informed today that Mr. Radovan Vítek, a Czeck national private person, owner of CPI Group, has increased his total holding in ABLON from 21,250,954 or 15.52% of the issued share capital, to 30,443,938 shares, equalling 22.23% of the issued shares and voting rights in the Company.
Ablon is holding an extraordinary general meeting on February 1st.
Game on! That, at least, is the word from Bloomberg, which reports that Orco Property Group founder JF Ott is buying shares in the company. (Not a secret, by the way, since it’s also confirmed on Orco’s website here) The reason, it’s speculated, is that he’s fighting with the Czech business mogul Radovan Vitek for control of the company.
Orco has gained 76 percent in the past three months after a bond-for-equity swap cut indebtedness and sent the stock price to a record low on Sept. 12, attracting new investors. Vitek, owner of Czech Property Investments AS, who bought a 30 percent stake, has proposed to become board member and cut the company’s share capital by 51 percent without cancellation of shares at a Feb. 4 shareholder meeting. Ott bought 8.4 percent last week, raising his stake to 8.9 percent, Orco said yesterday.
“We see CEO Ott’s increased stake as part of a fight for control over Orco,” analyst Josef Novotny at Erste Group Bank AG’s Prague-based unit wrote in a report to clients today.
At the same time Orco Property Group’s board of directors welcomed new board members David Ummels (Astin Capital Management) and Benjamin Colas (MTone), it was bidding adieu to OPG veteran Ales Vobruba as well as to Ott & Co. SA.
“The board thanked them for their decision and validated the cooptation,” read the statement.
Ott & Co. is the personal holding company of Jean-Francois Ott, who stays on as president of the board.
Ales Vobruba is to stay on as deputy CEO and MD of Orco in Central Europe, and the company has vigorously denied any validity to reports that he was no longer at the company at all.
Ummels and Colas have won their seats as part of the deleveraging process at Orco, as bonds were traded in for equity. The shift in the structure of the board, says Orco, reflects the shift in structure of the shareholders. Mtone for example currently holds 9.8% of Orco (9.9% in voting rights). Orco also revealed that Credit Suisse Securities now holds a 4.2% stake in the company. Ott & Co. SA currently controls just 0.7% of OPG. (details here)
The make-up of the 12 member board now is:
-J.F. Ott, Nicolas Tommasini who are described as “executive members representing the management of the Company”.
-5 “independent members” (Silvano Pedretti, Guy Wallier, Bernard Kleiner, Alexis Juan and Robert Coucke)
-And 5 non-executive members “representing the shareholders” (Bertrand Des Pallieres, Gabriel Lahyani, Richard Lonsdale-Hands, Benjamin Colas and David Ummels)
Orco Property Group has announced the sale of the Radio Free Europe building in Prague to a subsidiary of the L88 Companies (www.l88llc.com), for what it describes as an overall transaction value of USD 94m, “which is at DTZ valuation after taking into account all taxes on the transaction.” At the closing L88 handed over $80m in cash, $2m in concessions and a $12m note convertible “into a 20% stake in the parent company of the entity acquiring the building.”
The companies have also created a strategic alliance to develop and build a broad based building platform for the U.S. Department of State. After successfully concluding the development and sale of the Radio Free Europe building, “Orco is pleased to enter into this transaction with the L88 Companies and looks forward to working with the L88 Companies in the development of premium standard buildings for the U.S. Government. The Strategic Alliance for this broad based platform is a natural progression for Orco as it looks to new development opportunities following its successful financial restructuring,” stated Jean-François Ott, OPG’s President & CEO. Salans advised the vendor in the transaction.
So this is where it’s all been going…We’ll get some commentary and analysis on this later on. For now, just read an original Orco Property Group press release that details how MSREI is taking an 18.7% stake in OPG, which would make it the largest shareholder:
“Orco Property Group (“Orco”) and Funds advised by Morgan Stanley Real Estate Investing (“MSREI”) have entered into an agreement regarding MSREI’s investment in Orco. Subject to regulatory and internal approvals and final closing, Orco and MSREI have agreed that Orco will issue 3 Million ordinary shares in a private placement. The subscriptions of said Orco shares will be paid by MSREI through contributions of its stakes in Orco Germany and Endurance Real Estate Fund. Following the completion of the transaction, MSREI will become the largest shareholder of Orco with app. 18.7%. Orco will increase its stake in Orco Germany to app. 87.3% and in the two Sub-funds of Endurance Real Estate Fund as follows, 14.8 % in the Residential Sub-fund and 27 % in the Office I Sub-fund.
“Today, Orco Property Group has set in motion its strategy of reinforcing its control over an Orco Germany portfolio focused on its Berlin investment properties. This is part of Orco’s strategy to focus on its core business in the four cities of Berlin, Prague, Warsaw and Budapest with the aim to simplify the group`s structure. The contemplated sales of our assets in Russia are the next steps of this strategy.” stated Jean-Francois Ott. “We would welcome MSREI as our largest shareholder. MSREI’s wealth of institutional knowledge and experience coupled with Orco’s expertise throughout Central and Eastern Europe will provide a long term benefit to Orco’s shareholders, bondholders and stakeholders.”
Unibail Rodamco is to take a 60% share in a new JV with Orco Property Group whose purpose is to develop a shopping center on 3.7 ha of land on Orco’s enormous Bubny plot in Prague 7. Orco has agreed to sell the land to the new joint venture, with the transaction expected to close in 2012. The shopping center is to be built by 2017.
Has anybody else noticed a change in tone in the JF Ott blog recently? Just a few months ago, it almost seemed like open warfare with planning officials (Poland) and government officials (Croatia). But the tide, or the strategy, has turned, and the news seems decidedly sunnier as spring sets in. We revisit this in part by popular demand (a suggestion from the successful CEDES opening party last night), and as it happened there was a new post yesterday. In it, Ott mentions an upcoming General Assembly meeting as part of the company’s transparency strategy, and notes that an ING fund now owns more than 5% of Orco stock. He also speaks of a friendly recent meeting with a Croatian government official.
Times sure change quickly.