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% it does not already own of the group, which has failed to claw back market share in the face of strong competition in Spain.
Fridman's vehicle also said it had started negotiating with the banks who hold almost two-thirds of DIA's €1.45 billion debt, which, along with a negative equity position, puts DIA at risk of having to declare insolvency in less than two months.
If its takeover bid were successful but the struggling company needed funds urgently, L1 would extend a shareholder loan, to be recouped through a subsequent €500 million capital increase.
Offer Prospectus
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.
Shareholders have 23 days from April 1 to accept or reject the offer to buy all of their shares for €296 million, a payment secured by UBS.
The fund, which bought British health food chain Holland & Barrett in 2017, said it would pay a bond maturing this year through the capital increase and asset sales.
Creditors, led by Santander, are being asked to extend debt agreements until 2023 and set up new credit lines for €170 million.
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.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
