The managing board of DEMIRE AG, with the consent of the Company's supervisory board, resolved to increase the Company's share capital against cash contributions by €5,4m from €54,2m to €59,6m by issuing 5,425,774 new ordinary bearer shares with no par value and with a nominal value of €1 each and full dividend rights for the financial year beginning January 1, 2017.
The New Shares shall be admitted for trading on the regulated market of the Frankfurt Stock Exchange without the publication of a prospectus with simultaneous admission to the subsegment of the Frankfurt Stock Exchange with additional post-admission obligations (Prime Standard). AEPF III 15 S.à.r.l., an entity owned by Apollo European Principal Finance Fund III, both of whom are affiliates of Apollo Global Management LLC, has entered into a subscription agreement with the Company in which the Apollo Managed Funds undertake to subscribe for all New Shares. The New Shares will be issued at a price of €4.35, which represents a 11.3% premium to the closing share price as of 26 February 2018. The Apollo Managed Funds’ obligation to subscribe to the New Shares is conditional on clearance by the German Federal Cartel Office.
The Apollo Managed Funds have informed the Company, that they currently hold 150,000 shares of the Company, which represents a stake of approx. 0.28% in its current share capital, and that it has entered into agreements to purchase additional 1,089,061 shares. In connection with the Capital Increase, the Apollo Managed Funds have entered into a cooperation agreement with the Company’s largest shareholder, Wecken und Cie. ("Wecken") and a subsidiary of Wecken und Cie. as well as members of the Wecken family, who collectively hold a stake of 29.91% in the Company's current share capital and who hold collectively exchangeable bonds, which allow to purchase 10.23% of the Company’s current share capital. As a result of its acquired control over the Company, the Apollo Managed Funds will announce a mandatory tender offer to the shareholders of the Company at a price of €4.35 per share today. The Company has been informed by the Apollo Managed Funds and Wecken Group that the Company’s listing is to be maintained post the takeover offer.
DEMIRE intends to use the gross proceeds of the Capital Increase of €23.6m – less transaction costs in relation to the Capital Increase – to finance acquisitions of attractive properties in secondary locations in Germany. In parallel, DEMIRE continues to implement the initiated measures to further optimise its profitability and group structure with the support of its two strategic shareholders. The Company expects a substantial improvement of its financial and profitability metrics already for the fiscal year 2017 and the current fiscal year and continues to focus on growing its portfolio and active asset management to create value in its existing portfolio. DEMIRE aims to further reduce its leverage in the medium term and improve its credit risk profile to investment grade level in order to accelerate the future growth of the Company via an optimal, balanced and flexible financing structure.
Ralf Kind, CEO/CFO of DEMIRE: „We are delighted to welcome Apollo as an experienced and strategic investor who jointly with our other core shareholder fully supports the DEMIRE 2.0 strategy and also actively supports the planned growth of the Company. The business model of DEMIRE offers high potential for value creation in the German commercial real estate market that we would like to exploit in the next months and years. In addition, the already identified internal value drivers offer additional earnings potential to further increase the attractiveness of DEMIRE.”
Sebastian-Dominik Jais, a Partner at Apollo responsible for real estate investments in the European Principal Finance funds, stated, "We are looking forward to contributing to the future growth of DEMIRE. The investment by the Apollo Managed Funds is the result of a thorough review of the German real estate market, and we are excited about DEMIRE's strategy and positioning which we will help to support in partnership with Klaus Wecken and his family office."
Klaus Wecken commented: "Wecken & Cie. started to invest into DEMIRE in 2015 and developed the investment in 2017 to a strategic level, identifying DEMIRE‘s huge value potential in the German commercial real estate market. We are proud to have Apollo as a strategic partner working together with us from now on. Through DEMIRE 2.0 the way is set for the next stage in the evolution of the company, and we believe Apollo has the capital and the right strategic and cultural fit to support DEMIRE as we will continue to diversify and expand the company."
DEMIRE is being advised by Rothschild and Hogan Lovells.
