|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||40.81 - 40.81|
|52 Week Range||34.48 - 159.00|
|Beta (5Y Monthly)||1.78|
|PE Ratio (TTM)||2.34|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Jul 02, 2020|
|1y Target Est||N/A|
(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.
Shares in shopping mall owner Unibail-Rodamco-Westfield climbed 11% in afternoon trade in Amsterdam, making it the best-performing Stoxx 600 component on the day, after an investor group said they would oppose a company plan to sell 3.5 billion euros of stock. The investors, which include former CEO Leon Bressler, hold over 4% of the stock, and say the company instead should sell its U.S. portfolio to concentrate on Europe.
(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.