Investor: Arco Vara may prepare a share issue
20.11.2009, 11:37The troubled real estate group Arco Vara may be planning a new share issue, investment advisor Kristjan Lepik told Äripäev.
"The company has already announced to reduce the number of shares and this is increasing the likelihood of making an additional share issue," said Lepik, adding that at this point it is only a speculation.
By rules, a share issue can be done at least on a nominal value of the share, ie 10 kroons. At present Arco Vara share is trading at around 3 kroons.
Arco Vara share price fell 14% yesterday after its boads proposed cutting share capital by 95 percent. The board called an extraordinary shareholders meeting on December 11 to reduce share capital by 905 million kroons to cut share price volatility and strengthen the company’s capital structure.
Lepik who is not a shareholder in Arco Vara said that the share capital cut will change little. "There will be fewer shares, and the value of one share will be higher, but the total amount will remain unchanged. Of course, 4 euros per share sounds better than 0.2 euros, as it stands now," he added.
Arco has reported losses for the last six quarters and has been forced to sell its holdings in Estonian companies at a loss in recent months to improve liquidity.
Property prices in the region have more than halved from their peak in 2007.
Arco Vara is the biggest listed Baltic property developer