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UPDATE 1-Domus real estate firm scraps share sale due to weak market
May 7, 2014 / 6:12 PM / 4 years ago

UPDATE 1-Domus real estate firm scraps share sale due to weak market

(Adds details on offering, bonds, political background)

By Jan Lopatka

PRAGUE, May 7 (Reuters) - Dutch-based real estate firm Domus, which owns more than 43,000 apartments in the east of the Czech Republic, scrapped a plan for an initial public offering on the Euronext in Amsterdam on Wednesday, citing market conditions.

The firm was looking to sell 9.9 million existing shares and 2.3 million new shares, plus a possible over-allotment option, valuing the IPO at up to 287 million euros ($399.58 million).

Three Czech-based analysts and one asset manager contacted by Reuters in the past days leading up to the intended stock market flotation said they had no interest in the stock and did not see much take-up from Czech-based investors given it was not to be floated locally.

Domus is owned by BXR, a group of investors including financier Zdenek Bakala, which also owns struggling coal miner New World Resources (NWR) . The apartments are in the same region as NWR’s coal mines.

The plan to float followed an agreement by BXR owners to split up their holdings between Bakala and his family and the rest of the shareholders.

But the scrapping of the flotation complicates the exit of BXR from the firm, which has been at the centre of a political row over tenants’ claims they have the right to buy their homes at below-market prices.

Czech politicians, including the ruling centre-left Social Democrats, have in the past called on RPG Byty, the vehicle through which Domus owns the housing, to sell the flats to the tenants.

Domus said in documents leading up to the IPO it had gross asset value of 884 million euros as of the end of the last year. Earnings before interest, depreciation and amortisation was 57 million euros in 2013, and net profit reached 3.3 million.

The firm has 400 million euros in outstanding 6.75 percent bonds due in 2020, which gained ground after the company announced the IPO plan. It was bid at 105.00 in price and bid yield at 5.831 percent on Wednesday afternoon.

The firm said in a statement it would continue to “explore strategic options for Domus, which include re-visiting the IPO subject to improved market and geopolitical conditions”.

Bookrunner JP Morgan was not immediately available for comment. BXR and Domus representatives were also not available for further comment.

$1 = 0.7183 Euros Additional reporting by Jason Hovet, editing by Louise Heavens

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