WOOD Flash – GTC: AGM on 29 June to approve up to 20% capital increase (c.EUR 150m)

GTC has called an AGM for 29 June, to approve a capital increase of up to 20% new shares. At the current share price, issuing up to 97.1m new shares could raise around EUR 150m. GTC plans to raise the capital via an ABB, without prospectus and without rights, in line with earlier indications. The existing shareholders should have a preference in the book, in order to avoid dilution. GTC highlighted that Optima, its 66% controlling shareholder, is fully supportive of the equity increase and intends to participate. That said, Optima wants to use this opportunity to widen the company’s shareholder base and improve the liquidity of the shares. As such, new shareholders will be prioritised over Optima in the share allocation process. We believe the capital increase could improve the liquidity significantly and make the stock investable for a wider range of institutional investors, while reducing leverage and providing funds for further regional expansion. GTC is trading currently at a nearly 40% discount to NAV. We believe the capital increase presents an interesting opportunity to get exposure to an attractively-valued portfolio of real estate across CEE, with a development platform that could drive the organic growth of the business. We note that, alongside the capital increase, GTC intends to place a EUR 500m green bond, in a further move towards unsecured financing. It is in talks currently with the agencies, and expects to receive an investment grade rating from any of the three global rating houses shortly. We upgraded GTC to a BUY on 25 March, and we reiterate our positive view on the stock at the current levels.