SBB surge on Aker deal to benefit creditors
The deal marks the next major step forward for the once-embattled real estate company as it seeks new investors amid looming debt maturities. — Bloomberg
STOCKHOLM: Shares and bonds in Sweden's SBB rally after Norwegian industrial investment group Aker ASA became the commercial landlord's new main shareholder.
The deal, in which Aker's property unit took a 9.08% stake in SBB, marks the next major step forward for the once-embattled real estate company as it seeks new investors amid looming debt maturities.
Samhallsbyggnadsbolaget i Norden AB, as the group is formally known, will also benefit from improved cash flow and debt metrics, according to chief executive officer Leiv Synnes.
'There's the added benefit of how SBB is perceived,' Synnes said on Tuesday. 'The company is starting to do things that creditors will like.'
In addition, Aker agreed to acquire a stake in Public Property Invest AS, a Norwegian property group where SBB is the majority shareholder.
'Aker is prepared and willing to allocate more capital when needed, provided the business case meets our investment criteria,' Aker chief executive officer Oyvind Eriksen said. 'That mindset applies to our stakes in PPI and SBB.'
SBB shares jumped as much as 26%, the most since September 2023, in Stockholm. The company's hybrid notes were marked 4.6 US cents on the euro, higher at a bid price of 68.09 cents, according to data compiled by Bloomberg.
Aker's Eriksen added that he expected the investment in SBB to 'exceed over time' the 10% annual return target to the investment group's shareholders.
Under the terms of the deal, SBB will issue 164 million class-B shares to Aker Property Group at a value of 4.25 kronor apiece.
Aker will become SBB's largest shareholder and the equity issuance will lower SBB's loan-to-value ratio to less than 60%, according to Synnes.
'Aker Property Group is a strong owner that can help us in this transaction and in the future,' Synnes said.
There's also the increased possibility of a dividend at PPI, which in turn should help SBB's cash flow as it will now hold more shares in the Norwegian group, he added.
SBB also published an earnings report for the first quarter on Tuesday, where it announced the formation of two wholly-owned subsidiaries for the community property portfolio, SBB Samhalle and SBB Utveckling.
Synnes said the motivation for doing this was to appoint specialists within the company to handle specific property types.
Those working in the Utveckling unit will be focused on development projects, while Samhalle will be centred on the management of cash flow generative properties.
'The division makes it easier to attract capital to Samhalle,' Synnes said. 'That will be creditors in the first instance or even equity partners in the future.' — Bloomberg
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