February 5, 2019 / 9:08 AM / 7 months ago

UPDATE 2-Russia's Fridman bids for Spain's Dia to avert share plan

* Dia’s shares soar 62 percent to 0.70 euros

* LetterOne bid values whole company at 400 million euros

* Bid seen as defensive ahead of planned share issue (Recasts, adds details, comment)

By Andrés González

MADRID, Feb 5 (Reuters) - Russian investor Mikhail Fridman moved to take over Spain’s Dia on Tuesday with an offer valuing the struggling discount supermarket chain, in which he owns a 30 percent stake, at more than 400 million euros ($457 million).

Dia’s shares jumped by more than 70 percent to 0.73 euros after Fridman’s bid of 0.67 euros per share for the stock that his LetterOne (L1) investment vehicle does not already own.

Fridman’s bid is an attempt to counter a planned share issue worth 600 million euros agreed by Dia’s management in December which would have forced L1 to spend almost 200 million euros just to maintain its existing stake.

L1 said the bid was conditional on that plan being shelved by Dia, whose stock has fallen over 90 percent in the year after three profit warnings and concerns over its debt levels.

Dia has lost market share over the last few years as once-thrifty customers turned away from the discount supermarket chain as Spain economy recovered from a five-year slump.

“We believe the offer is very attractive for shareholders of the company. We have a long-term plan. We are aware the next three to five years are not going to be easy and we are not looking to receive dividends overnight,” L1 managing partner and former Dia board member Stephan DuCharme told Reuters

TWO PLANS

L1 said its bid was subject to acceptance by other Dia shareholders who hold at least 35.5 percent of its share capital, as well as approval by Spanish regulators.

In December Dia signed deals with banks totalling 896 million euros to secure much-needed short term liquidity and carry out the planned capital hike.

L1 opposed the plan and said it was working on its own, which will involved negotiating a debt maturity extension. However, DuCharme said this did not include a so-called haircut for debt holders, which would reduce what they received back.

In addition to its bank debts, worth around 800 million euros, Dia has three bonds worth 900 million euros that it must restructure to fix its finances, a source with knowledge of L1’s plans said.

“Dia needs deep financial and operational restructuring.” ($1 = 0.8760 euros) (Additional reporting Paul Day and Jose Elias Rodriguez, Editing by Susan Fenton and Alexander Smith)

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