LetterOne would consider shareholder loan for Spain's DIA: prospectus

MADRID (Reuters) - Russian tycoon Mikhail Fridman's LetterOne (L1) investment fund would consider injecting capital into Spanish retailer DIA if other shareholders accept its offer to buy them out, the fund said in the offer prospectus. L1 is trying to coax shareholders to sell it the roughly 70 percent it does not already own of the group, which has failed to claw back market share in the face of strong competition in Spain. If its takeover bid were successful but the struggling company needed funds urgently, L1 would extend a shareholder loan, the fund said, to be recouped through a subsequent 500 million euro ($561.3 million) capital increase.

Reuters March 29, 2019 00:06:22 IST
LetterOne would consider shareholder loan for Spain's DIA: prospectus

LetterOne would consider shareholder loan for Spains DIA prospectus

MADRID (Reuters) - Russian tycoon Mikhail Fridman's LetterOne (L1) investment fund would consider injecting capital into Spanish retailer DIA if other shareholders accept its offer to buy them out, the fund said in the offer prospectus.

L1 is trying to coax shareholders to sell it the roughly 70 percent it does not already own of the group, which has failed to claw back market share in the face of strong competition in Spain.

If its takeover bid were successful but the struggling company needed funds urgently, L1 would extend a shareholder loan, the fund said, to be recouped through a subsequent 500 million euro ($561.3 million) capital increase.

Spain's market regulator approved the offer prospectus on Thursday, eight days after shareholders voted in favour of L1's rescue plan for the company at the expense of one put forward by the board.

Underscoring the parlous state of DIA's balance sheet, L1 acknowledged for the first time since making its bid that the company could be obliged to declare insolvency if it could not re-balance its negative equity and pay off debt.

The fund, which bought British health food chain Holland & Barrett in 2017, said it had started negotiating with banks over the 1.45 billion euros DIA owes, and would pay a bond maturing this year through the capital increase and asset sales.

L1, advised by U.S. investment bank Goldman Sachs, said it expected DIA to generate no cash for the first two years, in which time it expected it to need to invest 200-250 million euros.

(Reporting by Andres Gonzalez and Isla Binnie; Editing by Jan Harvey)

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