Terra Firma revived plans to list a slimmed down stake in Deutsche Annington this morning, pitching the mini IPO at a downscaled price target and share offering which raises the required €400m floor gross proceeds, on which the drawdown of the €2.5bn JP Morgan and Morgan Stanley bridge loan is contingent.
A major element of Terra Firma’s strategy in the partial flotation of Deutsche Annington has been in raising the required capital to repay the outstanding debt in the GRAND CMBS, Europe’s largest-ever securitisation, which had a remaining balance of €3.2bn at the end of April.
Deutsche Annington announced plans to accelerate the full refinancing of the remaining €3.2bn debt by issuing several secured loans, worth in aggregate €940m,and issuing a corporate bond through JP Morgan and Morgan Stanley at up to €2.5bn, linked to its Standard & Poor’s BBB-rating company rating.
Prior to the corporate bond issuance, JP Morgan and Morgan Stanley agreed to provide a €2.5bn bridge loan, which required at least €400m in gross IPO proceeds to be raised.
Under German law, Deutsche Annington had 10 days from the date the IPO was pulled – which was six days ago – to re-launch the public offering on the basis of the original prospectus.
Terra Firma’s revived mini re-launch reduces the size of the stake in Deutsche Annington by 9.5 percentage points – from a 25% stake down to 15.5%.
Based on the upper end price target of €21 per share on the original 25% share sale offer, Deutsche Annington would have raised up to €1.1bn.
Under the more modest 15.5% share sale offer, Deutsche Annington will raise between €400m and €412.1m, based on a revised price target of between €16.5 and €17 per share.
This level at least meets the €400m threshold requirement to press ahead under the original terms of the JP Morgan and Morgan Stanley bridge loan agreement and, in turn, the timeline for the corporate bond issuance and subsequent GRAND CMBS repayment to bondholders in October.
All of which explains the downscaled share sale offering, price guidance and timing of the mini IPO, which remains below the level at which Deutsche Annington reported it had 80% of the original 25% stake covered less than 24 hours before pulling the IPO.
CoStar News understands that this is because within the final hours before the 10:15pm GMT announcement last Wednesday, two accounts pulled out which resulted in a lower than 80% book cover.
The total proceeds which will be raised in the accelerated bookbuilding today and tomorrow, including where investors exercise over-allotment options, will now be between €575m and €592.4m.
Rolf Buch, CEO of Deutsche Annington, said in a prepared statement this morning: “We are pleased to re-launch the IPO process of Deutsche Annington today. While the implementation of our operating strategy continues well on track, a successful IPO enables us to accelerate the diversification of our funding.”
JP Morgan and Morgan Stanley are Deutsche Annington’s joint global co-ordinators and joint bookrunners, while Bank of America Merrill Lynch and Deutsche Bank are joint bookrunners, and Berenberg Bank and Kempen & Co are as joint lead managers.
Commerzbank, Erste Group Bank and Société Générale Corporate & Investment Banking complete the IPO ticket as co-lead managers.