Fairfax to raise stake in Greece’s Eurobank Properties by April

Canadian investor Fairfax Financial Holdings will raise its stake in Greece’s Eurobank Properties to 41 percent from 19 percent via a share issue which is now expected to be completed by April next year, the companies said on Friday.

Under a deal first outlined in June, Eurobank Properties will proceed with a rights offering worth about 193 million euros at 4.80 euros a share. Fairfax will exercise its own rights and purchase the other major shareholder Eurobank’s rights for 20 million euros, meaning it will pump in about 144 million euros.

After the capital increase Eurobank will hold about 33.5 percent in the real estate firm, provided all other shareholders exercise their rights, the bank said on Friday.

Shares in Eurobank Properties were trading down 1.41 percent at 7.7 euros on Friday, valuing the firm at 465 million euros ($635 million).

Under the deal Eurobank will retain management control at Eurobank Properties until June 2020 and will fully consolidate the unit, with Fairfax represented at the firm’s board with customary veto rights.

The arrangement will be in force as long as Eurobank’s participation in Eurobank Properties remains above 20 percent.

Eurobank, Greece’s fourth largest lender, chose to be fully recapitalised by the state rescue fund to plug a 5.84 billion euro capital hole after losses on sovereign debt writedowns and bad loans.

It has fallen under the full control of the Hellenic Financial Stability Fund but Athens plans to return it to private ownership via an issue of more than 1 billion euros worth of new shares to private investors.

The two sides said they received key regulatory approvals but the rights issue still needs to get the green light from Greece’s securities regulator and stock exchange authorities.

[Reuters]