URW Share Price History
23 Dec, 2020
Thanx, a leading guest engagement platform, and Westfield unveil a new tier-based loyalty program for select Westfield shopping centers in the U.S.
(Bloomberg Opinion) -- “Work from home” and lockdowns have carved up the real-estate sector into a handful of winners and many more losers. The resulting split into the good, the bad and the ugly presents a challenge for investors who expect diverging valuations to revert to historic averages in 2021.As the pandemic took hold, investors hoovered up shares in warehouses and logistics centers that facilitate the socially distanced economy. Mall owners were abandoned. Between the two extremes, offices suffered, but not as much as feared.Many workers in finance, law and professional services adapted to remote working. Their firms’ revenues proved surprisingly resilient. That’s meant haggling over the rent hasn’t been a top priority.Still, the Sunday atmosphere that persists in financial centers during the working week makes it hard to be overly optimistic for offices just yet. Real-estate stocks focused on London offices have fallen by about a third, and they trade close to a 25% discount to their most recent reported net asset value. A discount below 20% would be more usual, so the valuations anticipate office values will fall further, but not collapse.The new strain of Covid identified in the U.K. has reinstated tougher lockdowns and closed restaurants and non-essential stores again. That makes it harder for mall operators to vacate the ugly spot on the podium. The curbs will immediately turn off tenants’ income and hit rent collections.Even with the U.K. and Europe embarking on Covid-19 vaccine campaigns, mall owners such as Unibail-Rodamco-Westfield — owner of the popular Westfield sites — and Hammerson Plc trade at discounts of about 50%-80% of NAV. That too anticipates further asset writedowns — savage ones.How might these valuations revert back to real estates’ historic low double-digit (or smaller) discounts to NAV? Either share prices must adjust, or underlying values must move — or a mixture of both. It’s hard to assess what might happen because there are two big unknowns.One is whether people will simply head back to the office when the pandemic is under control. The longer governments have pushed a WFH-where-possible policy, the more expectations have risen that flexible arrangements will stick. Some corporate tenants are already seeking less space, to turn homeworking into a cost cut. Still, the savings aren’t huge as a percentage of total staff expenses, and some employers will probably see a drop in the person-per-square-foot ratio as good for morale. Frustratingly for investors, long leases mean the picture will remain fuzzy for a while.The other uncertainty is the sustainable level of rents in retail and leisure. The pandemic forced shoppers online, diners to takeaways and fitness fanatics to home gyms. Existing trends rapidly accelerated. The resumption of office working would support city centers, but malls have a harder job preventing the online journey becoming one way. Their owners face the cost of making locations more attractive while servicing high debts. But if vaccines truly bring back some semblance of normal life, an indication of where consumer habits are settling could emerge in 2021.It’s easier to see rents and values of offices and retail premises getting worse before they get better. But expectations for these sectors are low already. Indeed, “safe haven” logistics properties could lose some appeal if investors buy back into malls and offices, Bloomberg Intelligence analyst Susan Munden points out. Such a rotation could gain pace if investment strategists are right in predicting investors will shy from from chasing pricey growth stocks next year and buy equities that look cheap and are exposed to a recovery.The gap between share prices and actual property values will narrow eventually. But with the virus becoming more menacing, and vaccine distribution slow, equity investors’ pessimism is going to be hard to turn.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
16 Dec, 2020
(Bloomberg Opinion) -- Patrick Drahi’s agreement to sweeten his bid for full ownership of Altice Europe NV is a double victory for shareholder activism in Europe. Minority investors have not only forced the billionaire to pay a fair price for the telecoms company. They have also shown that court action to defend their rights can focus minds — even in the Netherlands, the preferred European destination for entrepreneurs who don’t want to give too much away.To recap, Altice’s main asset is France’s SFR network. Drahi already had control through a dual-class share structure before making an early September bid to buy out minority shareholders for 2.5 billion euros ($3.1 billion). The offer was clearly opportunistic. Altice shares had roughly halved in value since just before the health crisis. The premium was a measly 24% over this weakened stock price. Small takeover top-ups are easier to justify when bidders already have control and are just cementing it. All the same, this was mean.The revised 5.35 euros-per-share offer has won over the opposition. It’s a 61% premium over the same benchmark. That fits with the 50%-plus levels where we’ve seen M&A get agreed in Europe during the pandemic. Drahi can justify it. The telecoms sector clearly holds recovery potential, assuming vaccines help get the pandemic under control.Indeed, Drahi is hardly overpaying. The offer is worth seven times expected 2021 Ebitda. That’s still below where low-cost challenger Iliad SA, owner of the Free brand, trades. For minorities, the cash bid pays out the value of a sizable recovery up front, while leaving upside for Drahi.If there’s a loser, it’s probably Altice’s existing credit investors. Even leaving aside the question of how the buyout is funded, it’s plausible Drahi will be comfortable running the company with higher levels of debt away from the public markets, where shareholder pressure was focused on bringing leverage down.The minorities — most vocally Lucerne Capital Management, but also the ubiquitous Elliott Management Corp. — probably had enough shares to prevent Drahi crossing the high threshold to squeeze them out. He had other tactical options, but these were open to legal challenge. The activists had already initiated proceedings in the Dutch Enterprise Chamber. Their case threatened the billionaire with the possibility not just of being forced to pay up, but also of seeing his influence chiselled away. A possible outcome was being forced into changing the board.Now we won’t know what the court would have decided. In that sense, the Netherlands’ status as a founder-friendly jurisdiction tolerant of dual-voting share structures has been preserved. Victory for the naysayers would have set a precedent.It’s been a good year for European activism. Drahi’s rival and fellow billionaire Xavier Niel, who founded Iliad, was part of a consortium that blocked mall operator Unibail-Rodamco-Westfield’s 3.5 billion-euro rights offer, a fundraising that needlessly threatened heavy dilution on ordinary shareholders. Having recommended the first weak offer, Altice’s directors have naturally endorsed the increase. It’s a shame they weren’t more robust in the first place. Boards watch out. The activists are holding you to account.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
23 Nov, 2020
(Bloomberg Opinion) -- Shareholder crusaders usually settle for less than they ask for. In Europe’s latest dissident campaign, they ended up with more. Activists who don’t waver are suddenly being handsomely rewarded.To re-cap the rapid succession of events at Unibail-Rodamco-Westfield: Former Chief Executive Officer Leon Bressler and telecoms billionaire Xavier Niel wanted to stop the mall operator’s 3.5 billion-euro ($4.2 billion) capital increase, take two board seats and add another independent director.They got it all, plus the chairman role for Bressler, the agreed departure of the current CEO and the immediate exit of four non-executives. The activists will have all the more clout on the Unibail’s shrunken board.It’s a significant moment for activism, and it’s happened in France, where challenging the status quo is particularly hard.The snag is that the level of influence obtained is disproportionate to the dissidents’ 5% shareholding: The outcome is close to gaining control without paying for it.Bressler has a very clear mandate. He arguably represents the majority, elected a director by shareholders fully aware of his plan for the company. The board appointed him chairman with good reason.Nevertheless, he must clarify whether the setup is a sticking-plaster solution hatched by a company in crisis, and what longer-term arrangements he intends to put in place. He should bring some counterweights into the boardroom. There are too few female directors for a start. And will he make way for an external successor at a given date? The drama shows what activism achieves when it refuses to compromise. Remember the playing field is generally tilted against rebel shareholders. They have limited voting power, and other stakeholders will often come to the aid of the under-fire company — a lawmaker, union boss or wealthy kingmaker. Witness the billionaires who initially defended Arnaud Lagardere, chairman of publisher Lagardare SCA, against a well-aimed activist campaign earlier this year.At Unibail, CEO Christophe Cuvillier cut a notably isolated figure in this crisis. Real estate is not a sector to get politicians fuming. A second of his predecessors joined Bressler and Niel in coming out against his strategy. True, the proxy advisory services were supportive up to a point, but not all investors slavishly follow their guidance. The math meant the activists needed only 20% of the shares to be voted “no” to prevent the company getting sufficient approvals to win.Advised by a legion of big-name banks, it’s astonishing Unibail didn’t strike the obvious face-saving deal — a binding commitment to delay a capital hike in return for Bressler and Niel sanctioning it as an option. It’s too late now.Whatever a shareholder campaign is about on the surface, any resulting poll quickly becomes a confidence vote on management. Lose and you leave. CEOs with political or billionaire friends have some defenses. The rest must learn when to blink.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
18 Nov, 2020
Longtime URW executive Jean-Marie Tritant will become ceo in January.
10 Nov, 2020
(Bloomberg Opinion) -- Shareholder activism is alive and well in Paris. Mall owner Unibail-Rodamco-Westfield’s plan to raise 3.5 billion euros ($4.1 billion) to gird its balance sheet for Covid-19 was voted down by investors after opposition led by billionaire Xavier Niel and former boss Leon Bressler. Their victory is strengthened by winning three seats on the firm’s supervisory board.This speaks to the credibility of their campaign, but also to Unibail management’s blinkered defense. In a land where dissidents don’t usually win, it’s a big moment.French activist campaigns often flounder when met with the tight-knit resistance of a cozy Parisian elite who don’t take well to being bossed around by hedge funds. But the Unibail battle turned that template upside down. The credible faces and arguments were on the side of the activists: Telecoms mogul Niel’s experience with debt markets and deep pockets, combined with Bressler’s long career in commercial property, lent weight to their arguments against a rights offer that promised heavy dilution: Why not sell more assets, or borrow more, especially as Unibail has ample cash to hand?Unibail Chief Executive Officer Christophe Cuvillier’s obstinate refusal to engage with the activists’ arguments — on a call with analysts he said he and his team were not “fools” — made things worse, locking his side into an all-or-nothing bet. His view became increasingly one of a glass-half-empty: Without a capital increase to bring down Unibail’s borrowings, the firm might lose its credit rating, pay more to raise debt and be exposed to a worsening pandemic. Even as a shareholder proxy firm advised delaying a rights issue to explore options, Cuvillier stood firm.This stance only added to the impression that Unibail’s plan was driven less by facts on the ground and more by trying to defend a strategy that had failed to pay off even before the health crisis struck. Niel and Bressler could credibly point to Cuvillier’s debt-laden expansion in the U.S. and U.K., driven by the 2018 acquisition of Westfield Corp., as the original cause of the firm’s indebtedness. Unibail simply didn’t look in control of its destiny, with pressure to raise capital coming from short sellers and investment bankers. Confidence had eroded.Cuvillier could have offered an olive branch to the investors with a compromise deal but chose not to — right up to the eleventh hour on Monday, when Pfizer Inc.’s positive vaccine announcement sent Unibail’s stock up some 30%. This was a sign that a strategy based on the worst-case scenario was on rocky terrain, especially for a stock trading at a near-80% discount to asset value until yesterday.While this is obviously a big victory for Niel and Bressler, Cuvillier’s inflexibility ultimately sealed his defeat. He would do well to learn the lesson from this and take a more constructive approach now that his opponents are inside the tent. Covid-19’s second wave is far from over, Unibail needs to restructure and reorganize and the shopping-mall industry faces structural threats from the likes of Amazon.com Inc. Still, for the ordinary shareholder, it looks for once like a deserved victory against an investor-unfriendly outcome.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
In a rare rights issue rejection for a company on France's blue-chip index, the shareholder vote fell narrowly short of the two-thirds majority required to pass the resolution, with 62% in favour of the capital increase. The plan had met with intense opposition from a consortium led by French billionaire Xavier Niel and former Unibail CEO Leon Bressler, who have campaigned for Europe's biggest property owner to step up asset sales including some of the U.S. shopping centres it took on with its 2017 purchase of Westfield.
By Geoffrey Smith
03 Nov, 2020
(Bloomberg Opinion) -- A new round of lockdowns in Europe is bad news for Unibail-Rodamco-Westfield’s mall business, but it could help boss Christophe Cuvillier drum up support for a 3.5 billion-euro ($4.1 billion) rights offer to ride out the pandemic. Cuvillier is trying to convince holdouts that an immediately stronger balance sheet is the best protection after a 30% drop in adjusted earnings per share in the nine months through Sept. 30. It’s a view shared by a rising number of sell-side analysts worried about Unibail’s 24 billion-euro net debt pile. Still, even if pressure is increasing for investors to approve the capital increase when they gather virtually next week, Cuvillier’s activist opponents — telecoms billionaire Xavier Niel and former Unibail CEO Leon Bressler — have reason to hope they can wield influence over the strategic direction of the company, whose fall from grace isn’t all down to Covid-19. Niel and Bressler, who are campaigning for three seats on Unibail’s board, have built a credible case arguing that Cuvillier’s management team and debt-laden expansion in the U.S. and U.K. — chiefly due to the 2018 deal to acquire Westfield — are to a large extent responsible for the company’s vulnerability to the pain of a global pandemic. Covid-19 may be a once-in-a-generation crisis, and Unibail isn’t the only property developer to be raising capital in this bleak environment, but its epic tumble stands out. Unibail’s market capitalization has shrunk about 80% since the end of 2017 to 4.8 billion euros and its debt metrics are worse than those of peers. Hedge funds have raced to bet against the stock, adding to pressure from lenders and ratings agencies. The company overpaid for Westfield, and is suffering for it.Even more awkward, Guillaume Poitrinal, Cuvillier’s predecessor, has publicly thrown his lot in with Niel and Bressler.While investors may yet approve a capital increase, they won't do so gladly. Unibail stock trades at an egregiously steep discount of 80% to book value, so a share issue threatens heavy dilution. Usually, shareholders would expect to see some governance reform in return for giving their support.That could pave the way for a half-victory of sorts for Niel and Bressler. Proxy adviser Institutional Shareholder Services Inc. has recommended shareholders approve a potential capital increase, but with a delay to allow a rethink with activist input in the boardroom. That might open the door to some key changes in the plan proposed by Unibail’s management. For starters, the size and timing of a cash call.Unibail says it has access to credit lines and cash worth 12.5 billion euros, which would cover about two years’ worth of refinancing needs. That suggests some freedom to wait a little longer, or sell more assets, before soaking investors. Cuvillier has hit back at the notion he’s going too fast — “We’re not fools,” he told analysts — but bond markets ultimately look awash with money.While Unibail has said all options are open regarding its Westfield assets in the U.S., more voices at board level might accelerate such decisions. And in a post-pandemic world, having a tech-savvy billionaire like Niel on hand to help reshape the mall experience would surely be useful.A lot can happen in a week, and there’s a reasonable chance that the coronavirus outbreak will require not one but several debt-cutting plans. Even if they don’t halt a capital increase, Niel and Bressler may still have their voices heard. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
23 Oct, 2020
(Bloomberg Opinion) -- One of the world’s biggest mall operators is using scare tactics to pressure its owners into handing over 3.5 billion euros ($4.2 billion) to help it through the pandemic. Without the cash, Unibail-Rodamco-Westfield says its future is at “material risk.”The snag is that any investors who believe Unibail is in such a serious state would have already sold their shares. The board needs to convince a different audience: Shareholders who have stuck with the company as the stock has fallen 80% since it agreed to pay $25 billion for Westfield Corp. in 2017. An investment that’s probably now a marginal holding in their portfolios is not going to have a strong claim on their funds.Unibail, which runs landmark centers like Westfield in West London, wants to cut its 27 billion euros of borrowings rapidly with cash from shareholders via a rights offer plus 4 billion euros of asset sales. Former Chief Executive Officer Leon Bressler and telecoms billionaire Xavier Niel, with a combined 4% stake, are campaigning for an alternative debt-reduction plan — skipping the share sale and doing more disposals. This doubles as a strategic overhaul by advocating the sale of U.S. assets that came with the Westfield deal to refocus on Europe.The crux of their argument is that Unibail has no immediate financing or liquidity problems, and no corresponding need to dump malls at fire-sale prices to replace the share sale. Cash and credit lines total almost 13 billion euros. The company could drop two notches on its credit rating and remain investment grade. Unibail’s riposte published Monday asserts that a strong investment-grade credit rating is essential, not because financing is cheaper but because the company believes this guarantees access to the market. Its credit lines need refinancing regularly and they’re hostage to the rating too.Unless Unibail knows something the market doesn’t, sustaining a high credit rating is a questionable justification for tapping shareholders at this time. Consider the debt market’s strong support for the company this year. Yields on Unibail’s two bonds issued in April have been on a pretty sustained tightening path. That has continued despite Bressler and Niel creating the risk the share sale fails. Meanwhile, the weighted average maturity of Unibail’s debt is seven-and-a-half years.This is hard to reconcile with Unibail’s identification of “an immediate need to strengthen our balance sheet.”The worrying interpretation for Unibail CEO Christophe Cuvillier is that bond investors welcome debt reduction however it’s achieved and may even prefer the strategic pivot the activists are proposing, never mind the loss of the near-term equity injection. Shareholders thought they had a binary choice here: Give more money to a team that agreed an acquisition that was overpriced even without Covid. Or skip the cash call, get savagely diluted and receive negligible compensation by selling their participation rights. The Bressler-Niel plan offers a third way, and both bond and equity investors appear comfortable with its admittedly higher risk.However grim the backdrop, a rights offer should always be embraced as the chance to tell a strategic story and whip up interest in the stock. Instead, Unibail has come up with scaremongering that is too easy to doubt.(Corrects description of Unibail in first paragraph.)This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
15 Oct, 2020
(Bloomberg Opinion) -- The divide between investors who believe Covid-impacted businesses should prepare for the worst and those who would prefer firms to muddle through is widening. Heavily shorted Unibail-Rodamco-Westfield is facing resistance to a 3.5 billion-euro ($4.1 billion) cash call from shareholders who think the mall operator can get by. The malcontents’ arguments are strong.Everyone agrees Unibail has too much debt, a legacy of its takeover of Westfield Corp. in 2018, which brought a brand and malls in London and the U.S. The question is the speed at which to reduce the burden. The company is in a hurry: Directors will always want to avoid accusations they didn’t take steps to protect the balance sheet if things get worse. Last month, Unibail unveiled a share offering alongside disposals and other cash-saving measures collectively worth 9 billion euros. The goal was to preserve a strong investment-grade credit rating, with borrowings worth below 40% of the value of its assets.Embarrassingly, this is now being called into question by two very credible voices — former Chief Executive Officer Leon Bressler and telecoms billionaire Xavier Niel. They point out that in spite of Covid, Unibail had little difficulty raising funds in the bond markets even before the rights offer was announced. The mall landlord has 3.4 billion euros of cash at hand — and a multiple of that in credit lines. That suggests it has breathing space to cut debt through a more ambitious disposal program, conducted with patience, all without having to hold shareholders to ransom for more money.The asset sales in mind are far more radical than what Unibail is planning and amount to a full strategic reversal. Bressler and Niel want an exit from the U.S., largely undoing the Westfield deal, arguing it lacked synergies and diluted the overall quality of the business. Unibail’s severe share-price underperformance between the announcement of the acquisition and onset of the pandemic suggests the market had already come to the same view.These arguments are forceful, but the naysayers’ 4% stake doesn’t give them much sway in a shareholder vote. They will need to buy more shares or rope in support to have a meaningful chance of blocking the fundraising and changing strategy. That said, they aren’t without friends.Unibail has the fear factor on its side and can play to that part of the market fixated on the downside. The impression here is that management has been driven to the cash call to get the short sellers in the equity market off its back. The bond market, which is likely taking a longer-term view about the quality of Unibail’s underlying assets, is much more sanguine, and the prospect of an equity hike doesn’t fully explain that.Given Unibail is asking for so much money relative to its 5.5 billion-euro market value, it needs to demonstrate that the pain it proposes inflicting on shareholders is entirely necessary.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
25 Sep, 2020
Amsterdam, September 25, 2020Press ReleaseHALF-YEAR RESULTS 2020: UNIBAIL-RODAMCO-WESTFIELD N.V.On September 25, 2020, Unibail-Rodamco-Westfield N.V. (“URW NV”) announced its 2020 half-year results and released its consolidated interim financial statements for the period ending June 30, 2020, which can be found on: https://www.urw-nv.com/en/investors/press-releases and as an attachment to this press release. URW NV and its consolidated entities, together with Unibail-Rodamco-Westfield SE (“URW SE”) and its consolidated entities, form Unibail-Rodamco-Westfield (“URW”). URW SE consolidates URW NV and its controlled undertakings, and its 2020 half-year results represent a comprehensive overview of URW, and is available on: https://www.urw.com/en/investors/financial-information/financial-results For further information, please contact: Investor Relations Media Relations Samuel Warwood Tiphaine Bannelier-Sudérie Maarten Otte Tiphaine.Bannelier-Suderie@urw.com +31 20 658 26 25 email@example.comFor more information, please visit: https://www.urw-nv.com/en/investorsAttachment * URW NV H1-2020 results
24 Sep, 2020
(Bloomberg Opinion) -- Europe’s big short may face a new challenger. The jumbo cash calls of pandemic-hit companies have been easy prey for hedge funds betting the stocks will fall. But the potential involvement of a sovereign wealth fund in a fundraising by Rolls-Royce Holdings Plc could herald a shift in the balance of power between short sellers and ordinary shareholders.The iconic U.K. engineer is considering a 2.5 billion-pound ($3.2 billion) capital increase and is talking to state-backed investment vehicles including Singapore’s GIC, the Financial Times reported last weekend. The injection would assuage fears over the company’s ability to withstand the "severe but plausible" downside scenario it described last month.Rolls-Royce is late to the party. The capital markets well has already had many visitors. The equity rally from March’s lows protected asset managers from redemptions, enabling them to support cash calls from companies sometimes increasing their share count by as much as 20%.Today, markets are wobbling. Meanwhile, we are seeing requests for cash so large that they can require so-called rights offers — a tortuous, drawn-out process for raising capital in volume. British Airways-owner IAG SA, mall operator Unibail-Rodamco-Westfield and Rolls are all seeking, or considering raising, at least 75% of their market value.They present tricky propositions. With the novel coronavirus still a public-health menace, these companies’ full recovery prospects may lie beyond the near-term horizon of stock-market investors. Sovereign wealth funds, with their decades-long view and need to make really big bets, will be more easily tempted.IAG already has a sovereign-backed shareholder in 25%-owner Qatar Airways, which has committed to its share of the 2.7 billion euros ($3.2 billion) the transport company is seeking. But no single investor in Rolls-Royce has more than 10%. A placing to a sovereign fund, assuming U.K. government approval, followed by a rights offer to the enlarged shareholder base would be one way of structuring a transaction.The entrance of new anchor shareholders into rights offers would put the cat among the pigeons. These deals provide rich pickings for short sellers and it’s been painful for ordinary investors to watch. The desperate companies are soft targets. Rumors start, the firm confirms it may sell new shares, negative momentum builds. An in-principle underwriting agreement with banks follows, final terms undecided. The stock stays under pressure until the equity issue is priced at rock bottom. Hedge funds cover their shorts with the bargain stock and exit. It all seems unnecessarily destabilizing for the company.The underwriting banks have no incentive to push against this. As buyer of last resort, it’s in their interest that rights-offer shares are priced as cheaply as possible. IAG’s stock has suffered as lockdowns have resumed. But without Qatar’s backing the situation would surely be more precarious. Quite simply, if a big chunk of a capital increase is spoken for at the outset, there is less scope for short sellers to disrupt the process.Introducing a sovereign fund may face political complications and obstacles. There is an alternative — just get the company's existing top shareholders to declare support for its cash call from the get-go.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
17 Sep, 2020
(Bloomberg Opinion) -- Unibail-Rodamco-Westfield has a history of shrugging off crises. A decade ago, Europe’s No. 1 operator of top-tier shopping malls and offices doled out cash to shareholders even as banks collapsed and austerity ruled. The rise of online shopping only pushed it further to keep buying trophies like Westfield. That halo of invincibility has well and truly slipped after Covid-19.The group’s market value has shriveled to 5.1 billion euros ($6 billion) from 27 billion euros in 2018 after a global round of coronavirus-induced lockdowns robbed malls of shoppers and tenants of sales. Even now that its sites have almost all reopened, the threat of a resurgence of Covid-19 and a deeper hit to property values have pushed the company to announce a 3.5 billion-euro capital hike and a 4 billion-euro asset-sale plan.The fall from grace is astounding. Unibail trades at a whopping 80% discount to book value, which a year ago would have made the company seem like a screaming buy. Pressure from hedge funds has been immense: Short interest is an estimated 28% of free float, according to Markit, higher even than Germany’s Wirecard AG before its spectacular collapse. Speculators saw this big, dilutive share sale coming.If Unibail pulls off its deleveraging plan, the firm reckons its loan-to-value ratio can drop to 30.9% from its current level of 41.5%, well below the 60% level that would constitute a breach of debt covenants. Encouragingly, Chief Executive Officer Christophe Cuvillier said footfall is almost back to normal in continental Europe and 70% of third-quarter rents have been collected.But is that enough? Rent payments and consumer spending depend on the direction of travel of Covid-19, and the ability of governments to keep supporting the economy. The earnings outlook is exceptionally cloudy: If the second half of this year is as bad as the first, annual profits could fall 25%, according to Bloomberg Intelligence analyst Sue Munden. Mall valuations could also plunge more than the firm expects: Analysts at Barclays Plc see Unibail’s loan-to-value ratio hitting as much as 57% in 2022. Notwithstanding the possibility of a vaccine or treatment against the coronavirus, work-from-home habits are spreading, online spending is rising, and demand for commercial property is falling in major cities. Leisure businesses from movie theaters to restaurants to hotels are having to rethink their model.This is a pandemic warning that goes beyond property. The ripple effects of Covid-19 extend further than lockdowns. They’re upending companies that previously looked unassailable, and have encouraged investors to put their marginal dollars elsewhere: Online retailer THG Holdings Ltd., which listed in London this week, already has a market value higher than Unibail.After years of proving mall skeptics wrong on the mixed model of “clicks and mortar,” and transforming malls into full-on experience centers, Unibail is now scrambling to overhaul itself. If it can’t, the only people profiting will be the bankers collecting fees from the firm’s cash call — and the hedge funds, of course.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.