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| UPDATE 3-Hypo Real defends state control to angry investors |
| Munich, 03.06.2009 |
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| By Edward Taylor
Munich, June 2 (Reuters) - Hypo Real Estate's (HRXG.DE) investors approved a 2.96 billion euros ($4.21 billion) capital increase late Tuesday to prop up the stricken lender.
The approval hands the German government control over 90 percent of the firm paving the way to nationalisation, even as key shareholders such as private equity investor J.C. Flowers continued to oppose the move.
Germany's financial markets stabilisation fund SoFFin said it will raise its stake in Hypo Real Estate to 90 percent after almost 74 percent of shareholders at the meeting voted to approve a capital increase. SoFFin said it would proceed with a squeeze out of shareholders.
In a statement Hannes Rehm, Chairman of the SoFFin Management Committee, said, "I would like to thank all the shareholders who accepted the takeover offer and approved the resolution on the capital increase, thereby clearing the way for a quick and unproblematic stabilisation of HRE."
Hypo Real Estate, Germany's highest-profile casualty of the financial crisis, which has been propped up with more than 100 billion euros ($142 billion) in capital and guarantees, most of which was provided by the German state.
Hypo Real Estate asked for an increase in share capital for up to 5.6 billion euros. Soffin, which already controlled 47 percent of Hypo's shares ahead of the meeting, said it would underwrite enough shares to raise its stake to 90 percent, bolstering Hypo by 2.96 billion euros.
Investors opposed the move because the government blocked other shareholders from taking part in the capital raising. "People are furious about what happened here," said Bernd Wobith, a 67-year-old teacher from Munich who holds 500 shares.
"It's mainly the previous management's fault that we have lost so much of our money, but there's no good reason why we can't continue to remain shareholders."
Ulrike Struzek, a 42-year-old housewife from Altenried near Stuttgart invested 160,000 euros in Hypo Real Estate in March 2008 on behalf of her disabled 13-year-old daughter.
Wiping away tears, she asked, "If we aren't allowed to remain shareholders, then what will be left of the money for my daughter in five or 10 years time?"
Shareholders were prevented from carrying fruit or bottles into the International Congress Center in Munich for fear they could be used as projectiles, and burly body guards were on patrol to ensure order.
Many, including a consortium with a 14 percent Hypo stake led by U.S. private equity investor J.C. Flowers, have dug in their heels to oppose the move. Flowers was not present, but was represented by a team of lawyers.
DICTATOR
A spokesman for Flowers said he would like to "remain a shareholder," and added that all options to prevent a squeeze-out were being considered.
One German investor protection group, the SdK, said it would vote against the capital hike because shareholders were not allowed to take part.
Around 1,900 investors, representing almost three quarters of the company's share capital attended the emotional meeting, where managers were accused of being "dictatorial" and "dishonest."
Axel Wieandt, Hypo Real Estate's chief executive, who took the helm in October 2008, appealed for additional capital to cover future losses and forecast a "high burden on earnings" this year and next.
"The capital increase that was approved today is a crucial component of the recapitalisation of the Company and the Group. We will require further capital and liquidity support to lead the Group over the next few years. In conjunction with the restructuring, which has already started, the Group now has a clear perspective."
Wieandt insisted there was "no alternative" to nationalisation and that that full government control would help the bank get refinancing on the capital markets.
Wieandt said that throwing out his proposals would result in insolvency for the group, adding that he knew of no alternatives to save it.
Some experts have said a collapse of Hypo could have had an impact similar to the failure of Lehman Brothers because of the German bank's importance to the covered bond market -- used by many local firms for finance.
Hypo Real Estate is now refocusing on a no-frills refinancing business for public sector and commercial property projects based on covered bonds. (Reporting by Edward Taylor; Editing by Rupert Winchester)
odkaz na stránku
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Address : Euro-Brew Ltd., Hlboká 22, 917 01 Trnava, Slovakia
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