ISS recommends appointment of all REFOCUS campaign candidates to URW supervisory board to reconsider rights issue

Thursday, 29. October 2020 11:39

Leading proxy advisor only provides “qualified support” for capital raising with no “urgent need” reconstituted board including direct shareholder representation must “reevaluate its merits”

Consortium of concerned investors reiterates call to prevent a destructive rights issue to ensure complete protection for all shareholders

LUXEMBOURG, Oct. 29, 2020 (GLOBE NEWSWIRE) -- The REFOCUS consortium of leading European investors, which now holds a combined five per cent stake in Unibail-Rodamco-Westfield SE (“URW”), welcomes the recommendations from Institutional Shareholder Services (“ISS”) and continues its campaign to urge all investors to vote AGAINST the value destructive €3.5bn rights issue as well as FOR enhanced governance at a Supervisory Board level in order to provide maximum protection for all shareholders.

ISS, which acts as the primary proxy advisor for the vast majority of URW’s institutional shareholders, called on shareholders to vote for the addition of all three of the consortium’s nominees to the Supervisory Board, while only providing “qualified support” for the capital raising for which there is no “urgent need” with the intention of signalling “the need to hold off on the proposed capital raise and provide an opportunity for a reconstituted board that includes direct shareholder representation to reevaluate its merits with access to non-public information.”

Commenting on the recommendations, Léon Bressler and Xavier Niel, said: ISS’s report clearly recognises the major issues that form the basis of our REFOCUS campaign: the self-inflicted damage of the disastrous Westfield transaction, the unnecessary nature of a rights issue at the worst possible moment given substantial liquidity and relatively low cost of debt, a total absence of a long-term strategy and a clear lack of oversight from a supervisory board with little financial stake in the future of the company.

“Since the successful launch of our REFOCUS initiative we have heard from investors, ranging from institutions representing millions of savers and pensioners to the smallest retail and employee shareholders. There is strong support from investors who would be hurt by URW’s RESET plan and who have been completely ignored by URW’s management team and Supervisory Board who cling on to a failed strategy.

Given the total support for the RESET plan from the current Supervisory Board, and the fact that the rights issue with no defined price can be executed immediately after the EGM by a misguided leadership team, ISS’s well-intentioned plea to allow a reconstituted board with direct shareholder representation to re-evaluate does not provide the absolute protection required by all shareholders at this stage. Shareholders must rely on their own judgement to protect their investment and vote against the rights issue.

We call on ALL shareholders to vote AGAINST the proposed rights issue, and FOR our nominations to the Supervisory Board. You can find out how to do this on our website - https://refocusnotreset.com/faqs

In its 28th October 2020 report, ISS notes:

  • “The central issue in this proxy contest is the substantial capital raising, which triggered public opposition from the dissidents. URW's current issues are largely self-inflicted and mostly related to its leverage, inherited from the Westfield deal, for which current management is responsible.”
  • “Considering the manageable impact that the COVID-19 crisis has had on the company so far and URW's substantial liquidity, our analysis does not lead to the conclusion that there is an urgent need for the proposed capital raising. Moreover, the dissidents have made a compelling case that there are sufficient reasons to question the company's strategy and the board's role in overseeing management, which has resulted in significant TSR underperformance since the Westfield deal was announced. This suggests that shareholders could benefit from additional oversight on the board, which is ultimately responsible for major strategic decisions.”
  • “Our recommendation of qualified support for the capital raise – in combination with our recommendation of support for the addition of the dissident nominees to the board – is intended to signal the need to hold off on the proposed capital raise and provide an opportunity for a reconstituted board that includes direct shareholder representation to re-evaluate its merits with access to non-public information. If, after reassessing available alternatives, the reconstituted board were to conclude that a capital raising is necessary, the company could proceed with the rights issue.”
  • “We note that none of the company's main competitors, particularly those in the US, where the sector has been hit harder by the current crisis, have thus far proposed to raise capital – except for Hammerson, the UK operator, which has the highest net debt/EBITDA in our peer group and operates exclusively in the worst hit European market.”
  • “The above analysis of the impact of a large, discounted capital raising on the future potential stock price recovery and possible upside would suggest that current shareholders, who invested in the company prior to COVID-19, would bear substantial losses in the value of their investment.”
  • “URW's current issues are largely self-inflicted and mostly related to its leverage, inherited from the Westfield deal, which saddled the company with a substantial debt pile. Despite over-delivering on the initially planned asset disposal plan, management was unable to bring down net debt to more reasonable levels before the COVID-19 pandemic started, as asset values were impaired in the interim. While leverage is relatively high, the company's ample liquidity and relatively low cost of debt (which management agrees is not an issue), as well as its high-quality asset portfolio and broad geographical diversification mitigate to a certain extent the leverage concerns.”
  • “The central issue in this proxy contest is the substantial capital raising, which triggered public opposition from the dissidents. The rights issue, which sent the shares 20 percent down over the two days following its unexpected announcement, comes at a steep price to shareholders in terms of diluting future potential upside once the current crisis passes. Shareholders are rightly questioning the proposed cure at a time when the stock is trading at its lowest level for the last 20 years. We note that the rights issue can be executed immediately after the EGM approval is obtained.”
  • “Overall, our analysis, which is based on publicly available information, does not lead to the conclusion that there is an urgent need for the proposed capital raising. The dissidents have also made a compelling case that there are sufficient reasons to question the company's strategy and the board's role in overseeing management, which has resulted in significant TSR underperformance since the Westfield deal was announced.”
  • “Our recommendation of qualified support for the capital raise – in combination with our recommended support for the addition of dissident nominees to the board – seeks to encourage the board to act with prudence and consider the results of the shareholder vote (and the views of the dissident nominees, if elected) before rushing to execute a capital raise immediately after this EGM.”

Disclaimer

By receiving this document, the recipient of this document agrees to all the terms specified in this Disclaimer. The recipient of this document agrees that use of the information contained in this document is at his/her/its own risk.

This document has been issued by Flagship Retail Investment S.à r.l. (“Flagship Retail Investment”), an investment vehicle of Aermont Capital Real Estate Fund IV SCSp managed by Aermont Capital Management S.à r.l., and by Rock Investment, a wholly-owned subsidiary of NJJ Holding, the personal investment vehicle of Xavier Niel (“Rock Investment” and, together with Flagship Retail Investment, the “Consortium”).

The purpose of this document is to provide information about the Consortium’s views on Unibail-Rodamco-Westfield (“URW”), its opposition to the €3.5 billion rights issue at the 10 November 2020 general meeting, the possible alternate strategy that could be implemented to deliver long-term shareholder value and its proposal to strengthen URW’s Supervisory Board through the appointment of new members.

This document is for discussion and information purposes only. The views expressed herein represent the opinion of the Consortium as of the date hereof. The Consortium reserves the right to change or modify any of its opinions expressed herein at any time and for any reason and expressly disclaims any obligation to correct, update or revise the information contained herein or to otherwise provide any additional materials.

The Consortium may include in this document information and views provided by other investors and interested parties. Unless described as facts or as the opinions of third parties, the information in this document constitutes the interpretations, opinions, or estimates of the Consortium.

All of the information contained herein is based on publicly available information with respect to URW, including public filings and disclosures made by URW and other public sources as well as on the Consortium’s analysis and opinion of such publicly available information. The Consortium has relied upon and assumed, without independent verification, the accuracy and completeness of all data and information available from public sources and no representation or warranty is made that any such data or information is accurate. Forward-looking information contained in this document, including statement of opinion and/or belief, are based on a variety of estimates, assumptions or projections made by the Consortium and incorporates exogenous factors. These forward-looking statements, estimates and projections are inherently uncertain and subject to significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. Actual results may differ materially from the estimates, projections or assumptions contained herein due to reasons that may or may not be foreseeable.

No representation, warranty or undertaking, express or implied, is given and no responsibility or liability or duty of care is or will be accepted by the Consortium or its affiliates or any of its directors, officers, employees, agents, or advisers concerning: (i) this document and its contents, including whether the information and opinions contained herein are accurate, fair, complete or current; or (ii) the provision of any further information, whether by way of update to the information and opinions contained in this document or otherwise to the recipient after the date of this document. This document does not confer any rights on the recipient thereof or impose any obligations on the Consortium.

This document is for informational purposes only, and does not constitute (a) an offer, invitation or advice to buy or sell, or a solicitation of an offer to buy or sell, any security or other financial instrument or otherwise engage in investment activity and no legal relations shall be created by its issue, (b) a “financial promotion” for the purposes of the Financial Services and Markets Act 2000, as amended (c) “investment research” or “investment advice,” each as defined by the FCA handbook, or (d) an “investment recommendation” as defined by Regulation (EU) 596/2014. No information contained herein should be construed as a recommendation by the Consortium.

This document is not intended to form the basis of any investment decision or as suggesting an investment strategy. This document, the information and analyses contained herein are not intended as tax, legal, financial or investment advice. This document has been prepared without regard to the specific investment objectives, qualification, financial situation and needs of any particular recipient. The recipient should not rely on the information contained herein in connection with any investment decision.

No agreement, commitment, understanding or other legal relationship exists or may be deemed to exist between or among the Consortium and any other person by virtue of furnishing this document. The Consortium is not acting for or on behalf of any recipient of this document. The Consortium is not responsible to any person for providing advice in relation to the subject matter of this document. Before determining on any course of action, any recipient should consider any associated risks and consequences and consult with its own independent advisors as it deems necessary.

At the date of this document, the Consortium and its affiliates holds more than 5.0% of URW’s share capital and the Consortium and/or its affiliates may also have positions in any other issuer. Accordingly, this document should not be viewed as impartial.

The Consortium reserves the right to take any actions with respect to its investments in URW as it may deem appropriate.

The Consortium has not sought or obtained consent from any third party to use any statements or information contained herein. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed herein. This document has not been approved or verified by any regulatory authority, and no regulatory authority has endorsed these materials or passed upon the merits of an investment. All trademarks and trade names used herein are the exclusive property of their respective owners.

Access to this document may be restricted by law in certain jurisdictions. Persons who have access to this document are required to inform themselves about and to observe any such restrictions.

MEDIA CONTACTS

International - FinElk
Louise Tingström: +44 7899 066 995
Cornelia Schnepf: +44 7387 108 998
Robin Haddrill:  +44 7920 016 203
Email: aermont@finelk.eu  

France - DGM Conseil
Michel Calzaroni: +33 6 07 34 20 14
Christian d’Oléon: +33 6 08 49 89 07  
Email: m.calza@dgm-conseil.fr
Email: chrisdo@dgm-conseil.fr
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