WOOD Flash – Echo Investment: sells last tranche of EPP shares, but tones down likelihood of special dividend
Yesterday (5 November), Echo Investment announced that the company has concluded the sale of the EPP shares, selling the remaining 15.3m shares for EUR 17.1m (EUR 1.12/share). We believe this is positive. However, management has recently struck a more cautious tone regarding the special dividend, as the raising of new debt has become more difficult in Poland recently. While we believe this does not mean that the special dividend is off the table altogether, if management does not succeed in issuing new bonds, or identifies a bigger acquisition target, we believe it may decide to use the proceeds to finance land purchases. While we continue to like the stock at the current valuation, if management eventually decides against a special dividend, the stock may lack a strong trigger for a rerating in the near term, in our view.Echo Investment is a real estate investment and development company based in Poland. Co.'s is engaged in operations in the real estate market, the design, construction and development of shopping and entertainment centers, hotels, office buildings, houses, blocks of flats and apartments. Co.'s operations are organized along three operating segments: Shopping and Entertaining Centers, Offices and Hotels and Residential. Co. also offers general contracting services for third party investors. Co. owns properties throughout Poland, including Szczecin, Poznan, Warsaw, Krakow and Kielce, among others, and abroad, including Ukraine, Romania and Hungary.
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