IPO date to depend on market conditions
ITTL Trade Tourist and Leisure Park Ltd. (ITTL) plans to raise EUR 13.1 mln from the proceeds of a new share issue in order to finance the operation of two new buildings located within the Shacolas Emporium Park near Nicosia as well as to reduce debt, but the exact period when the initial public offering will commence has not yet been decided.
“The period when the IPO will be held will be decided at a later stage by the board taking into account prevailing market conditions,” ITTL Executive Marios Panayides told the Financial Mirror.
He said the company does not intend to hold road shows, but will make preliminary soundings among investors during the next two or three months. In any event, according to company rules, it has a year from the date its prospectus was approved in March 2009 to complete the flotation.
ITTL is the owner of the Shacolas Emporium Park, located on prime location on the outskirts of Nicosia which includes The Mall of Cyprus and the IKEA complexes. The company is a wholly-owned subsidiary of Woolworth (Cyprus) Properties Plc (FWW), a company listed on the Cyprus Stock Exchange.
Purpose of flotation
Part of the proceeds of the new share issue will finance the construction of two new buildings with a combined capacity of 10,000 sq.m. and 314 underground parking spaces, which will be ready for operation in May.
“One of the buildings will be used as a Volvo/Hyundai showroom,” Panayides said.
The rest of the proceeds of the new share issue will be used to reduce bank debt, which as at end of 2008 amounted to EUR 91 mln.
ITTL will issue 17.5 mln new shares of EUR 0.50 nominal value at EUR 0.75/share. The company has reserved 9.4 mln shares or 53.72% of the new issue for FWW shareholders, 5.88 mln shares or 33.57% will be sold to institutional investors while 2.23 mln shares or 12.71% of the issue will be offered in the IPO.
The company reserves the right to shift excess demand from one category of share applicants to the other in order to cover the issue.
After the issue, ITTL’s share capital will amount to 117.5 mln shares of which 14.89% will be spread among the public and the rest will be owned by FWW. The company will then seek a listing in the CSE Alternative Market.
ITTL will also offer free warrants in the ratio of 1:5 at an exercise price of EUR 1.25 by November 2013.
CISCO, the investment banking arm of Bank of Cyprus prepared the prospectus and are advisers of the issue.
14-year leases
The risk of investment in ITTL is relatively low considering that it has signed long term rental agreements with its tenants, most of which are for up to 14 years with an option to renew.
An analysis of the prospectus shows that IKEA, Carrefour, Debenhams, Zara and Bershka have signed 14-year rental agreements with options to renew, while others such as K-Cineplex have lease agreements for nine years with options to renew.
Panayides explained that ITTL gets a minimum rent or a percentage on sales from its tenants, whichever is the higher.
With the Mall of Cyprus scoring a major success and attracting record shoppers, the revenue of ITTL has been higher than anticipated.
Improving results
Turnover, which in 2007 amounted to EUR 2.19 mln, jumped to EUR 3.65 mln in the first six months of 2008. No details for the full year 2008 results have been provided in the prospectus, but these will be released as supplementary information when the accounts will be ready.
Following a land and building revaluation amounting to EUR 35 mln, which was made in the first half of 2008, ITTL recorded a net profit of EUR 29.35 mln until June 30, 2008 compared to a net loss of EUR 1.27 mln in 2007.
As at June 30, 2008, its total assets amounted to EUR 171.7 mln, capital and reserves at EUR 60.86 mln, while other liabilities amounted to EUR 111 mln, of which EUR 90 mln are bank debt as at end of 2008.
Based on the EUR 0.75/share flotation price, CISCO calculates the price-to-book value at 1.23 times, while based on the 117.5 mln shares after the IPO and a price of EUR 0.75/share, ITTL will be aiming for a market capitalisation of EUR 88 mln, placing it among the largest companies listed on the CSE.
