Unibail/Xavier Niel: Cuvillier’s travails | Monetary Instances


Operating an unlimited shopping center enterprise in a pandemic is troublesome sufficient. It simply acquired even more durable for Christophe Cuvillier, boss of Unibail-Rodamco-Westfield, which is predicated in Paris. Telecoms billionaire Xavier Niel needs to dam an enormous €3.5bn rights problem, a part of Unibail’s plan to cut back money owed by €9bn, simply over a 3rd. This can seem like cavalier interference to Mr Cuvillier. Worse, Mr Niel may very well have some extent.

One more entertaining skirmish between French tycoons presages a broader battle throughout enterprise. Coronavirus-induced drops in earnings will drive many firms to shrink their stability sheets. That may go away buyers in every thing from fairness to senior debt scrapping with administration — and one another — over the remaining worth.

Mr Niel has purchased a 4.1 per cent stake in Unibail with Léon Bressler, a formidable former boss of Unibail. They oppose a rights problem plan that favours bondholders. They justifiably argue there’s a higher method. The shares jumped 11 per cent in response.

Contemporary money is required to scrub up errors made on Mr Cuvillier’s watch. The acquisition of Frank Lowy’s Westfield group for $25bn in 2017 was poorly timed and costly. Since then, the market worth of Unibail has dropped over 70 per cent.

Below Mr Cuvillier’s plan, €4bn of disposals would complement the rights problem to assist preserve URW’s funding grade credit standing. Whole money owed would fall from €24bn to €15bn.

However not like rival mall operators similar to Hammerson of the UK, which performed its personal rights problem in September, liquidity shouldn’t be a urgent concern. Unibail estimated its reserves at greater than €12bn within the first half, together with €3.4bn of money.

That has emboldened Messrs Niel and Bressler to suggest scrapping the rights problem and promoting off US property as an alternative.

The disposal wouldn’t be simple within the present market. Malls within the US have been in decline for longer than in Europe, with even decrease valuations. A e-book worth of €14bn for Unibail’s US property is optimistic. A value nearer to €10bn could be extra lifelike, thinks Inexperienced Road a analysis group. However a sale would cut back leverage usefully. Unibail’s loan-to-value would fall to a tolerable 30 per cent.

Mr Cuvillier’s actions counsel he needs to guard a giant chunk of Unibail’s enlarged portfolio when extra radical surgical procedure is required. Minority shareholders ought to again the Niel/Bressler plan as an alternative.

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