STOCKMANN on Monday announced its department stores in Helsinki, Riga and Tallinn will be sold as part of a sweeping eight-year re-structuring programme.
The Finnish retail company said it will continue to operate the department stores as usual as a tenant while using the proceeds of the realisation primarily to pay off its debts secured against the department stores.
Jari Latvanen, the chief executive of Stockmann, on Monday refused to comment on whether the department store chain has already identified a buyer for the properties.
“We won’t be commenting on an ongoing process. How the department stores are valued in the re-structuring programme is also confidential information,” he stated in a press conference in Helsinki on Monday.
He also declined to estimate how the sale is expected to impact the profitability of the department store operations. Stockmann has derived a considerable share of its result from rents paid by, for example, the external fashion retailers that lease parts of the department store in downtown Helsinki, according to Helsingin Sanomat.
The lease agreements of its other department stores have been re-negotiated for smaller premises.
Stockmann yesterday announced some of its unsecured debts will be converted into its series-B shares, an arrangement that could leave current shareholders with a 46.9-per-cent, unsecured creditors with a 16.1-per-cent stake and hybrid bond holders with a 37-per-cent stake in the company.
Unsecured creditors will also be offered an opportunity to exchange their receivables into secured notes five years after the issue. The offer is tempting as following the sales of the department stores the notes will be secured against by far the most valuable part of the retailer, Lindex.
The aim of the offer is to enable the company to leave the re-structuring programme ahead of the eight-year schedule, said Jyrki Tähtinen, the attorney administering the re-structuring of Stockmann.
“A listed company as big as this hasn’t been created through re-structuring proceedings in years. These new debts wouldn’t be re-structuring debts, so it’s possible that the amount of re-structuring debts would decrease significantly in the early stages. Utilising an element like this is, as far as I can tell, is a new and mutually beneficial innovation for the re-structuring practices in Finland,” he analysed.
The company will also combine its series-A and series-B shares in the general meeting held after the re-structuring plan has been granted the requisite court approval in order to improve the liquidity of the share and its ability to secure financing form the market.
Investors were buoyed by reports about the re-structuring programme. Shares in Stockmann surged by over 20 per cent from the closing price of 1.072 euros on Friday to 1.290 euros on Monday.
Aleksi Teivainen – HT