Richard Homburg, Chairman and Chief Executive Officer of Homburg Invest Inc. ("Homburg" or the "Company") (TSX: HII.A & HII.B and NYSE Euronext Amsterdam: HII), has announced on behalf of the Company, a new strategic direction to focus the Company's activities exclusively on income producing properties.
Homburg Invest has appointed a special committee to consider a plan to spin off the Company's development and other non-income producing properties to its shareholders. As part of the new strategic direction, the special committee will also consider a plan to reorganize Homburg's equity structure by creating a single class of common shares, each with a single vote and equal dividend rights. The terms of the share reorganization proposal, including the share exchange ratio, which will be subject to shareholder approval, will be announced in the coming months.
Homburg also announced that no dividend will be payable in 2009. In future years, as previously announced, the Company will declare an annual dividend based on the Company's performance and market conditions. Dividends will be declared in June and paid in July.
Under its new strategy, Homburg Invest will hold income-producing properties. The Company will be a growing real estate investment company with strong cash flows that will, subject of course to market conditions, pay healthy annual dividends to its shareholders. Homburg Invest will target a 50% to 60% ratio of debt to total equity. To achieve this, as previously announced, the Company will make greater use of strategic alliances and partnerships. The Company will continue to be listed on both the Toronto Stock Exchange (TSX) and on NYSE Euronext.
The new spun out entity will hold assets projected for future development. This entity will strive to have no long-term debt. Development projects will begin again once financial markets have stabilized. It is anticipated that the assessment process will be completed by autumn 2009.
Homburg will continue to issue Homburg Capital Security instruments to raise additional capital as part of its debt management strategy. The Homburg Capital Security A is a 9.5%, 99-year bond that is to be listed on NYSE Amsterdam. The issue of HCSAs permits the Company to reduce its debt-to-equity ratio, as 80% of all outstanding HCSAs are considered equity for accounting purposes. Homburg Invest is considering offering holders of Homburg bonds the opportunity to exchange their holdings for HCSA.
"Our financial position is solid," said Richard Homburg. "We are profitable and funds from operations remain healthy. These initiatives will enable Homburg to build our cash position, further strengthen our balance sheet and create greater certainty and stability for our shareholders in these difficult economic times. Under this new strategic direction, we will be in an excellent position to build value for shareholders and to take advantage of the best opportunities that present themselves in the months and years ahead," Richard Homburg added.
"The creation of a single class of voting shares will benefit all our shareholders. Indeed, we are taking this initiative because we believe strongly that we own high-quality assets, the value of which is not reflected in our shares. We believe in the ability of markets to discover that value."
Homburg Invest will provide more details on the various elements of its strategic initiatives as they become available.