Atenor capital round forces investor to make a binary choice

As an investor, ‘sit there and do nothing’ is less of an option than ever, because this will result in significant dilution without compensation.

Almost six months after CEO Stéphan Sonneville announced the funding round together with a dramatic warning about the market situation, the capital increase of the real estate developer Atenor

a fact. Between Monday, November 13 and Monday, November 27, shareholders can subscribe to 13 new shares in a notice of 3 pieces, at 5 euros each.

The subscription rights will be listed on the stock exchange during that period under the ticker ATE19, allowing investors to buy or sell ‘uneven’ fractions. For example, anyone who owns 100 Atenor shares can subscribe to 429 new ones with 99 shares for 2,145 euros. The remaining subscription rights can then be sold, or the investor can buy two more to purchase 13 additional shares.

That subscription price is a discount of 60 percent on the latest stock price, but is barely a tenth of the stock price of 48.4 euros with which 2023 kicked off. That is an illustration of how unforgiving the harsh interest rate environment is for (real estate) companies with (too) high debt levels. That is the case for Atenor: the half-year report showed that the 900 million debts far exceed the equity capital, which has shrunk to 223 million, while the interest costs on that debt are increasing.

Result: to reach the target 161 million euros, Atenor must issue 32.18 million new shares, more than four times more than the 7.43 million shares currently in circulation. Investors who do not subscribe to the capital round will therefore expect a significant dilution of their future share of the profit and dividend of more than 80 percent, the prospectus shows. The dilution can even amount to a maximum of 83 percent, since 3D and co. have the option to subscribe to 4.3 million additional shares at the subscription price of 5 euros (‘top-up’ shares, according to the prospectus).

It is important to know that sitting around and doing nothing, which was what almost half of Biocartis investors did a year ago, is less than ever a viable option. Anyone who does not use his preferential right sees that preferential right expire worthless and therefore receives no compensation. These rights are not, as is usual, auctioned as scrips, but are transferred free of charge to the major shareholders, primarily 3D and Luxempart. They can thus consolidate their control over the real estate developer.

The shareholders of Atenor therefore have a binary choice: either subscribe for the full price – and therefore, given the size of the funding round, invest a lot of extra money in a share on which they have probably already lost a lot of money – or sell their shares. An important choice, but there is still a weekend to go through the 169-page prospectus.