It is shortly after 11, supervisory board president Michael Knap opens the extraordinary shareholders’ meeting and greets all shareholders and their representatives, the members of the supervisory board and executive board, the in total four supervisory board candidates standing for election, as well as the lawyers and notaries and other attendees.The ‘Metastadt’ in the 22nd district has capacity for a total of between 800 and 1,000 people, we will report later on the exact number of participants. Representatives from the journalist community are also at the venue (which is not surprising, in view of the newsflow in recent weeks).
In the past hours, news has also come in thick and fast. We announced yesterday evening that the executive board had decided not to propose a resolution for the authorization of a partial offer for CA Immo at today’s extraordinary shareholders’ meeting. CA Immo and O1 in turn published the result of their partial offer for IMMOFINANZ this morning: approximately 1.57% of the shares were tendered in the course of the offer – in total (including those shares previously purchased in the market) this brings them to just over 6% and as a result they are the second-largest shareholder after the Fries-Gruppe.
The proceedings continue: Mr Knap explains the formalities, the procedure for requests to speak, etc. IMMOFINANZ currently has 1,073,193,688 issued shares. Subsidiaries of IMMOFINANZ AG hold 74,013,942 of these as of today. The voting rights carried by these 74,013,942 shares can therefore not be exercised. The number of company shares with voting entitlement consequently amounts to 999,179,746 shares. In this context, the executive board must now give a report on the treasury shares. CFO Birgit Noggler, in the course of the report, elaborates on the past share buyback program 2014/15 (around 10.16 mill. shares), the reduction in financing through the use of treasury shares (from which around 44.5 mill. shares were withdrawn) and the current ongoing buyback program.
“The reason for the buyback program is that the current share price is significantly below the net asset value (NAV) per share. Up to now, 6,775,454 shares were repurchased, representing a proportional amount of EUR 7,034,163.50 in share capital. The equivalent value of the shares corresponds to a total purchase price of EUR 18,996,924.88,” states Birgit Noggler.
With this, we come to the executive board presentation.
CEO Eduard Zehetner greets the shareholders. “Relatively unexpectedly, I am standing before you again today, I already bid you farewell at the last annual general meeting. However, the events of the last weeks have made this extraordinary shareholders’ meeting necessary. And I am pleased to be able to meet you again today – and the pleasure is all the greater because this morning we learned the result of the partial offer from CA Immo and O1.”
“IMMOFINANZ shareholders have, with insight and foresight, prevented the bidders from achieving their goal. Thank you very much for this.” Spontaneous applause.
Zehetner proceeds to the presentation, which he mentions has now become somewhat obsolete. But it can still be used as a case study. “Why are we here today? We are here because the general meeting is to decide whether a shareholder with a small stake can obtain de facto control.” The current IMMOFINANZ articles of association would namely enable the voting out of office of the entire IMMOFINANZ supervisory board and the appointment of a replacement board shaped by whichever shareholder. With this, a short notice changeover at IMMOFINANZ would also be possible, on the basis of the majority in the supervisory board – controllable by ‘whoever’.
“Let’s go further with our case study,” says Zehetner. And he moves on to the agenda items. “What do we do to prevent this type of situation from occurring, where someone takes over a company without a control premium?”
Increase in the majority necessary for the removal of supervisory board members to 75 percent, in order to impede the removal of the current supervisory board by O1/CA Immo (agenda item 1.d).
Reduction in the control threshold for a mandatory offer to 15% in accordance with §22 (2) of the Austrian Takeover Law (Übernahmegesetz) (agenda item 1.c)
Reduction in the maximum number of supervisory board members to six people (agenda item 1.a).
Election of two additional supervisory board members (agenda item 2).
With respect to the reduction in the control threshold, the CEO points to the average turnout history at IMMOFINANZ annual general meetings and the associated risk of the attainment of control with a 15.3% share of voting rights – without a requirement to submit a takeover offer with an appropriate premium to all shareholders.
Zehetner continues the case study and gives a short overview of O1, IMMOFINANZ and CA Immo. O1 is a real estate company with 13 office buildings in total and a minority holding in a Moscow development, O1 has no retail or logistics properties, neither in Russia nor anywhere else. And O1 is not listed on an exchange.
“Why are we so interesting for diverse players?” asks Zehetner – and points to the regional distribution and the business model, as well as the increasing cash assets, of IMMOFINANZ. “And that is above all when our share price is under pressure due to the Russia / Ukraine crisis.”
Now he comes to CA Immo and goes into detail about the difference in the respective size of IMMOFINANZ and CA Immo and the development of specific key figures in the past year.
Next part of the presentation: the CEO explains the individual resolutions proposed in agenda item 1 and the reasons for them.
1a) Reduction in the maximum number of supervisory board members to 6 people
- Establishment of a market-standard and appropriate number of supervisory board members (6 members), while filling any open mandates in the interests of a functional board
- Allows sufficient expertise to be obtained as well as staffing of the necessary committees
- Reduces the risk of external influence on the appointment of further supervisory board members
1b) Removal of the term of office for supervisory board members elected in extraordinary shareholders’ meetings, which differs from the legal provisions
- Equal treatment of supervisory board appointments in the extraordinary shareholders’ meeting and the ordinary general Meeting
- Alignment of the articles of association with § 87 (7) of the Austrian Stock Corporation Act (Aktiengesetz)
1c) Amendment to the articles of association to reduce the control threshold from 30% to 15%, in accordance with §22 (2) of the Austrian Takeover Act (Übernahmegesetz)
- Risk of attainment of control at around 15% of voting rights already exists
- Avoids attainment of control without triggering a requirement to submit a takeover offer with an appropriate premium to all shareholders, which is not in the spirit of the Austrian Takeover Act (Übernahmegesetz)
1d. Lifting of the general reduction in voting majorities required to pass resolutions at annual general Meetings
- Alignment with the regulations contained in the Austrian Stock Corporation Act (Aktiengesetz)
- Reasonable measure in connection with the risk of attainment of de facto control by CA Immo/O1 and the resulting disproportionate influence on strategic measures on the basis of a minority stake
- Prevention of attainment of control through replacement of the supervisory board in the extraordinary shareholders’ meeting with a simple majority, which can be reached with a holding of around 15% of IMMOFINANZ share capital.
It comes to the discussion.
A representative of PHI (CA Immo subsidiary) comes to the podium and takes the floor. He proceeds with the assumption that co-operation between CA Immo and IMMOFINANZ has not been ruled out and expresses gratitude for this. Concerning the resolutions proposed, he cannot understand why a change should now take place (after more than 15 years). A lower control threshold is not needed and would impede future structural changes, he says. “We believe that this measure is not necessary.” The agenda items are an overreaction to the partial offer by a group which really only wants to bring in its competence in real estate, states the PHI representative.
A representative, also a lawyer, from O1 Group steps onto the podium, fully agrees with the remarks of the previous speaker and asks the shareholders to seriously consider whether they want to assent to this – in his opinion “free-float hostile” - regulation.
Now Rudolf Fries steps up to the podium: “I have represented the Fries family since the most difficult times at IMMOFINANZ. In the past years we have used our 6.5%, in conjunction with the free float and the executive board, to support this IMMOFINANZ, which at the end of 2008 was effectively insolvent. The ship, which at that time lurched over the Atlantic, is now a high sea freighter.” With his 6.5%, he considers himself to be clearly part of the free float. “We are the largest shareholder, but we have formed a practical association, to the benefit of the company.”
He, Fries, is in favour of the reduction of the control threshold and the increase of the quorum necessary for removal of supervisory board members. This would serve to protect the free float, to the disadvantage of a core shareholder. “We IMMOFINANZ shareholders are best sustainably positioned, when we back these proposals with the executive board. And I also believe that IMMOFINANZ is strong enough to shape the future with the free float as positively as in the past years.”
IVA President Rasinger comes to the podium, he is a shareholders’ representative and is acting on behalf of around 60 mill. shares today, equating to approximately 15% of the attendant share capital. He points out that the majority of the votes he represents have provided instructions. Rasinger goes over the events of the past weeks and declares that he thinks nothing of real estate companies taking each other over. They should reduce vacancies and pay out dividends.
He is happy insofar that a number of issues have already been resolved. The IMMOFINANZ free float reacted clearly to the partial offer from CA Immo/O1, the result was not ‘resounding’, on the other hand he is also pleased that the originally foreseen agenda item number 3 (Authorization of a partial offer for CA Immo) has disappeared from the agenda. Rasinger emphasizes that the shareholders want dividends or BUWOG shares, which has proved to be a good experience in the past. Share buybacks are only his third choice.
Rasinger goes over the agenda items. He is fully in favor of the reduction in the control threshold to 15% – that is in the interest of the free float. He is likewise in favor of a qualified majority requirement for the removal of supervisory board members. Additionally, six supervisory board members would be sufficient – he would however had preferred that the voting for the new supervisory board members took place at the next annual general meeting.
CEO Zehetner begins with the Q&A session – the reasons for the proposals put forward in today’s extraordinary shareholders’ meeting have been sufficiently explained. The CEO estimates the costs for the general meeting at just under EUR 500,000.
Further questions and statements from shareholders follow.
One shareholder comes to the podium and states: “I believe that I speak for many shareholders: we have nothing against new shareholders, but they must pay a corresponding price”. Furthermore, he sees the Russian real estate belonging to IMMOFINANZ as a big opportunity.
Another shareholder points out that the offer price of EUR 2.80 was very far away from NAV. And he is pleased that the executive board clearly spoke out against it. CA Immo should also withdraw the complaint against Mr Zehetner.
CEO Zehetner answers a question about whether the control threshold should not be immediately reduced to 8%. “That must always be proportionate to the turnout at the annual general meeting.” IMMOFINANZ proposes 15% because the historical turnout at annual general meetings has been on average around 26%/27%.
One shareholder highlights that IMMOFINANZ is now a broadly based real estate group and thanks the CEO.
A further shareholder expresses incomprehension over the complaint against Dr. Zehetner. And he thanks him for not ‘escaping’ earlier into retirement.
We come to the reading of questions.
Mr Zehetner addresses a question about a dividend. The payment of a dividend is not a question of liquidity, but of distributable profit in the unconsolidated company financial statements. Due to the history of IMMOFINANZ, the company has a balance sheet structure which puts only capital reserves at its disposal. And these cannot be distributed. The distributable profit in the current environment depends significantly on the valuation of the Russian real estate - as well as the final result.
It is therefore not yet possible to say whether a dividend can be distributed or not. The company is however carrying out a share buyback program, which constitutes a type of dividend payment.
Zehetner furthermore addresses the share price. This is currently around the all-time high after Lehman (current IMMOFINANZ share price plus 1/20 of the current BUWOG share price, as shareholders received one BUWOG share for every 20 IMMOFINANZ shares in the course of the spin-off). No further shares in BUWOG will however be spun off.
What is to be said against distributing further BUWOG shares as a non-cash dividend? Some of the BUWOG shares have already been monetized via an exchangeable bond, some are needed by IMMOFINANZ to service convertible bonds and IMMOFINANZ intends to use the remainder – as has always been communicated – to strengthen general liquidity. (We said in the course of the spin-off that it is intended to release this portion in the medium term.)
There are no further requests to speak in relation to the first agenda item. Mr Knap states that 3,679 shareholders, respectively representatives, have turned out today, representing 399.6 mill. shares. Today’s general meeting is therefore quorate. He moves now to the details of the voting process.
We come to the voting:
First agenda item 1.1 (reduction in the maximum number of supervisory board members to six). Around 76% vote in favor of the proposed resolution, the resolution has the required majority.
Second agenda item 1.2 (term of office for supervisory board members elected in extraordinary shareholders’ meetings): the resolution does not have the necessary majority and was therefore rejected.
Third agenda item 1.3 (reduction of the control threshold): the resolution has the required majority and was passed.
Voting on 1.4. (higher majority requirement for the removal of supervisory board members): the resolution does not have the required majority and was consequently rejected.
Mr Zehetner addresses the result of the last vote (1.4) as a shareholder and points out to fellow shareholders that: “Exactly this point, which the O1 representatives have now rejected as IMMOFINANZ shareholders, is proposed by O1 as a resolution at the forthcoming CA Immo general meeting. I will leave it to you to work it out.”
We come to the second agenda item, which relates to the new election of supervisory board members.
The representatives from PHI and O1 request to speak again. Both shareholders repeat their request to select their two candidates for the supervisory board election and not those proposed by the executive board. Both candidates are not present today due to the short notice.
Candidate Horst Populorum now introduces himself. He is employed by Spitz Group and has looked after the European food industry for around ten years and therefore knows how European retail chains ‘tick’. He is also business executive at Witiko Invest, which has influence over around 30 mill. IMMOFINANZ shares. “These shares have been held since 2008 and I have therefore, like many of you, experienced the ups and downs of the last years. Witiko Invest has the same core interests as most of you. We want a dividend and at minimum a stable or increasing share price valuation.” In addition he points out his experience in the real estate area.
Candidate Wolfgang Schischek comes to the podium and runs through his resume and his career at the second-largest banknote printing machine manufacturer in the world. In the period from 1980 to 2010 he was the sole director of the manufacturer König & Bauer, responsible for 800 employees. He took over the business with a turnover of 120 mill. Austrian schillings and handed it over with a turnover of EUR 180 mill.
A few requests for leave to speak from shareholders now follow. The resumes of the two supervisory board candidates who are not present are also read out by Mr Knap, at the request of shareholders.
We come to the voting.
First point: Increase in the number of supervisory board members from four to six: around 86% vote in favor of the resolution, giving it the required majority.
Now the supervisory board members will be voted for, whereby in the first instance votes will be cast for the candidates proposed by IMMOFINANZ, states the president of the supervisory board.
Vote for Horst Populorum: He is elected to the supervisory board by the general meeting and accepts the appointment.
We come now to the vote for Wolfgang Schischek: he is also elected to the supervisory board by the shareholders and accepts the appointment.
CEO Zehetner now discusses why the executive board decided not put agenda item 3 (Authorization of a partial offer for CA Immo) to the vote.
As CA Immo, at the request of O1, intends to increase the required majority for voting supervisory board members out of office to 75% at its general meeting, and that this is expected to be passed due to the 26% stake held by O1, IMMOFINANZ sees no possibility to be adequately represented on the CA Immo supervisory board.
The non-vote on agenda item 3 is not connected with the outcome of the partial offer by CA Immo/O1 for IMMOFINANZ, as only just under 1.6% of the shares – significantly less than targeted – were tendered. “This result obviously gives us great pleasure,” states Zehetner. And he adds: “one more personal comment on the subject: that was the best farewell gift that IMMOFINANZ shareholders could have given me.”
The general meeting is over. Thanks for reading and for bearing with various typing errors.