Listing on an unregulated market
As Courbet is listed on Euronext Access, a non-regulated market (formerly known as the Marché Libre), minority shareholders do not benefit from the PACTE law which allows the implementation of an OPR/RO process (squeeze out) in favour of a shareholder holding more than 90% of the capital. However, shareholders benefit from a “voluntary buyout offer” process prior to delisting. The OTT Group holds 95% of the capital as of June 2022 and an estimated 89% at the end of 2022.
We have not been informed at this stage whether Courbet might be interested in changing its segment to a regulated market. However, Mr. Ott has informed us that he wants to make Courbet a long-term asset management vehicle and wishes to retain majority control for the foreseeable future.
Negative equity and tax losses carried forward
Courbet’s equity was a negative €2m at the end of 2021 for a balance sheet total of €0.2m. The precise structure of the liabilities (including liquid and payable debt) is not known in detail at this time.
The negative equity suggests the existence of a tax loss carry forward. Based on the information available, we cannot assess the material possibility of using this carry forward as a deduction for future profits, nor the possible possibilities of a “carry back”. As Courbet has not had any significant operational activity recently, our assumption is that the known losses are related to equity investments and cannot be carried forward or used. We therefore use a standardised tax rate from year one.
Short-term financing
At the last available accounts, Courbet’s available cash was zero. The continuity of operations must be ensured by the OTT group (reference shareholder). There is currently no firm commitment of financing received by Courbet that is public.
The acquisition of the La Bourboule real estate complex was financed by a 100% vendor loan. The creditor is the OTT group, holding 95% of Courbet’s capital. We believe that the financial structure will be strengthened by a global capital increase of €7m to be carried out by June 2023: i/ conversion of the OTT shareholders’ claims (€2m); ii/ conversion of the La Bourboule OTT claim (€1.5m); iii/ remuneration of the Cannes contribution (€2.4m from OTT and €1.2m from the original owner)
Medium term financing
The works phase at La Bourboule and Cannes is dependent on obtaining bank loans, various subsidies and significant support from the majority shareholder via debt (additional shareholders’ current account, convertible bonds, capital). The OTT group has assured us of its intention and ability to finance 100% of the project with equity if necessary.
Courbet wishes to explore the possibility of bond financing (dry or convertible). Given the size of the Company, we will consider this solution beyond the 2022-26 seed period. We will favour the idea of equity financing, bank financing and classic quasi-equity financing (CB, BSA), excluding the favourable hypothesis of a bond placement subscribed in the OTT sphere.
Further dilution
Beyond the capital increases of up to c.€7m in 2022-23, any significant or rapid project in the future will require the issuance of new shares. While the dilution cannot be assessed at this stage, the current minority shareholder is protected in the short term by the OTT Group’s shareholding. With 95% of the capital (June 2022), the issue price per share is neutral for him and the risk of significant dilution for the minority shareholder is low.
Partner’s current account
At 31 December 2021, we estimate the current account of associates at €2m (€2.9m at 30 June 2021 net of €1.0m of proceeds from the sale in August 2021). We assume that this current account was acquired by the OTT group at a value close to zero at the same time as the acquisition of 95% of the capital of Courbet. Courbet still owes the nominal value.
Beyond the €1.5m vendor credit granted by the OTT group for the acquisition of La Bourboule, this current account represents a substantial nominal value vis-à-vis the minority shareholders (5% of the capital in June 2022) and therefore a risk of dilution. For balance sheet purposes, it seems likely to us that this current account will be converted into capital at its nominal value, on the basis of a price per new share equal to the NAV published by Courbet in June 2022, i.e. €1.20 per share.
Consolidated financial statements, reporting.
The Company does not publish consolidated financial statements. The housing of assets in dedicated SPVs (La Bourboule, Cannes) may require consolidated financial statements from the fiscal year ending 30 June 2023.
In the event of a very fast development by acquisition-renovation, the Company does not communicate at this time on the possible depth of an analytical reporting (P&L per asset etc.) allowing validation of the success of the project by stage.
General and specific risks
The risks inherent in any real estate or hotel project are: i/ the location and quality of the asset; ii/ the appraisal and obtention of authorisations if necessary; iii/ the general implementation and works schedule; iv/ the economic conditions (downstream: market price at completion, upstream: financing and rates); v/ governance and vi/ the quality of the tenant coupled with the firm duration of the leases.
In the case of Courbet, the favourable acquisition prices in themselves significantly reduce the overall risk of the projects, without in themselves guaranteeing the value of the asset over time.
At this stage, the Board of Directors does not have broad powers to increase the share capital by issuing securities and other matters. We expect the Board of Directors to seek such authorisations from the General Meeting.
