UPDATE 1-German Gagfah plans capital hike, Fortress to cut stake

Tue Jul 9, 2013 2:32pm EDT

* Capital hike is worth 374 million euros, based on Tuesday close

* Share placement being offered at 8.90-9.15 euros/shr

FRANKFURT, July 9 (Reuters) - German real estate group Gagfah on Tuesday said it would raise capital to cut debt and fund investment, while its majority owner Fortress would reduce its stake in the company.

Gagfah said a total of 40 million shares would be offered to institutional investors through an accelerated book building process.

The statement confirmed a Reuters report which had said that the company was set to unveil a large capital measure including a capital increase.

Gagfah shares closed up 1.2 percent at 9.35 euros ($11.95) on Tuesday.

Based on this closing price, the capital planned to be raised would be worth 374 million euros.

The 40 million shares were being offered at a price range of between 8.90 euros and 9.15 euros, two sources familiar with the share placement told Reuters.

Gagfah said of the total 40 million shares, 10.5 million would come from Gagfah's existing treasury shares, while 9.5 million new shares would be issued.

Fortress planned to sell a further 20 million shares, which would reduce its stake to below 50 percent, on a diluted basis, if all shares are sold, Gagfah said.

Fortress currently holds 60.8 percent of Gagfah.

Deutsche Bank and Goldman Sachs were acting as Joint Global Co-Ordinators, while UniCredit is also a joint bookrunner on the transaction.