(Adds pricing of coupon and exchange premium, CEO quote)
VIENNA, Sept 4 (Reuters) - Austrian property company Immofinanz on Thursday paved the way to trim its stake in spun-off Buwog by offering bonds worth 375 million euros ($493 million) which it can repay either in cash or in Buwog shares.
Holders of the bonds, which will mature on Sept. 11, 2019, can redeem them in 2017, with Immofinanz having the right to decide at both stages whether it will pay in cash or Buwog shares. The bonds have a coupon of 1.5 percent and an exchange premium of 15 percent, Immofinanz said.
The exchange price of the bonds was to be published after the market closes. Buwog shares were trading down 4.6 percent at 14.74 euros by 1313 GMT.
Immofinanz holds 49 percent of Buwog, whose shares will join Austria’s blue-chip ATX index later this month.
Should Immofinanz choose to exercise its right to repay the bonds only with Buwog shares, it would retain a stake of around 27 percent in the spun-off company, according to Reuters calculations based on a reference price of 15 euros per share.
“These exchangeable bonds will release a significant part of the liquidity tied up in our Buwog shares for alternative uses,” Immofinanz Chief Executive Eduard Zehetner said in a statement.
“We will also retain full flexibility with regard to the future use of these shares and benefit from planned dividend payments by Buwog up to any exchange date.”
Proceeds will be used to repay existing financing, for portfolio investments and growth opportunities, Immofinanz said.
Buwog said last week it would pay a dividend of 0.69 euros per share for 2013/14 and planned to continue distributing dividends.
Shareholders in Immofinanz this year approved a spin-off of an initial 51 percent of Buwog to separate Buwog’s portfolio of German and Austrian homes from Immofinanz’ eastern European commercial assets.
Immofinanz bought 18,000 German homes for about 892 million euros in February, paving the way for the spin-off. Buwog said this week it sees its biggest growth market in north-western Germany, with property prices high in Berlin and Vienna.
BNP Paribas, JP Morgan and Morgan Stanley are joint bookrunners.
1 US dollar = 0.7611 euro Reporting by Shadia Nasralla and Angelika Gruber; Editing by Mark Potter