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Related Garners $1.4 Billion Cash Infusion; Australian Property Trust Suspends Dividend and Slashes Estimates; eFuture Caps Big Third Quarter; Competition for Alitalia Comes Down to the Wire
- Related Companies, a real estate development company, announced on Monday that it had received a $1.4 billion cash infusion from a consortium of investors. Goldman Sachs Group Inc. (GS) and MSD Capital L.P. have purchased equity stakes in Related totaling 7.5%. Mubadala Development Company of the United Arab Emirates, and the Olayan Group from Saudi Arabia, will also invest in the company through a debt offering. Related is one of the largest private development firms in the United States and has assets of over $15 billion, including the new Time Warner Center in New York City. Both the U.S. and foreign investors have agreed to take an equal part in future development projects undertaken by Related. Announcing the transaction Stephen Ross, chief executive officer of Related said, "As the industry continues to move towards bigger, more complicated development transactions these new financial partnerships ensure that Related has a ready and deep source of capital to take advantage of virtually any opportunity regardless of size or scale." Future projects being considered by Related include a 26-acre mixed-use waterfront neighborhood at the West Side Rail yards in New York City.
- Centros Properties Group (CEOPF), an Australian property trust, announced yesterday (Monday) that it would suspend its dividend payments and reduce earnings estimates. The Australia based owner of almost 700 shopping centers in the United States is worth more than $14 billion and saw its shares drop more than 75% on Monday as a result. Centros Properties also said it would sell some of its assets if it is unable to restructure its debt by February 15, 2008, the deadline set by its lenders. The company used significant debt financing to grow rapidly in the United States through a series of transactions including the recent $3.7 billion dollar purchase of Excel Realty Trust, a real estate investment trust. On a conference call Chief Executive Officer Andrew Scott told investors "We never expected, nor could we reasonably anticipate that the sources of funding that had historically been available to us and many similar companies would shut for business." Shares of Centros fell from $3.77 all the way to $1.18 Monday, stripping $4.3 billion of market capitalization. In addition to the debt restructuring, investors fear that Centros, whose largest tenants include US retailers such as Wal-Mart (WMT) and Target (TGT), will have a very large exposure to the U.S economy.
- eFuture Information Technology Inc. (EFUT), one of the leading supply chain management software companies in China, released its earnings results for the third quarter of 2007 on Monday. Total revenues for the company jumped 31.4%, compared to the same period in 2006, reaching $4.7 million. Gross profits for the period were up $2.26 million, a gain of 42%. Net income was $587,557 a gain of 120%. As a result of rapid growth in the Chinese retail industry, total sales contracts signed in the quarter increased 91%. eFuture also completed the acquisition of Crownhead Holdings Ltd., a leader in supply chain management for supermarkets, and believes that this will help the company penetrate new markets and continue to grow revenues and earnings in the fourth quarter of the year. Chairman and Chief Executive Officer said, "With our robust organic growth and the synergies of our combined organization which includes the acquisition of Crownhead, we are rapidly improving our position in China's retail industry and see more opportunities ahead." Yan further stated that he expected the total revenues for the year to be $9.3 – $10 million.
- The two finalists to buy the Italian government's 49.9 % stake in Alitalia – Linee Aeree Italiane S.p A. (AZA) outlined plans for the airline if they are the winning bidder. Air France-KLM (AKH) has said that it would inject $1.09 billion (750 million euros) into the carrier via a capital increase open to all shareholders and underwritten by Air France. The airline said that reviving Alitalia's aging fleet would be a top priority, with a large portion of remaining new funds used to restore the brand's image. In a statement released Monday, Air France said, "Air France-KLM confirms its determination to support Alitalia in its recovery and to relaunch it as a strong national flag carrier with world coverage." Privately held Italian airline Air One said it would inject $1.43 billion (1 billion euros) immediately into the faltering Italian carrier and an additional $6.14 billion (4.3 billion euros) between now and 2012, with 3 billion euros earmarked for new planes. The Italian government is expected to announce on Tuesday which of the two airlines it will select to enter into exclusive negotiations for the sale of its stake. The government has been looking for a buyer since a failed attempt to auction the airline this past summer.