Developers Diversified, which some observers are concerned may face issues with refinancing, has raised some capital by selling 30 million shares to German developer ECE Projektmanagement for about $112.5 million The firm has $1.7 billion in debt maturing in the next two years.
The transaction will increase Alexander Otto and certain relatives' stake in Developers Diversified to a total of 36 million shares, or more than 20 percent of its common shares outstanding, making the Ottos the company's largest individual shareholder.
In addition, the deal calls for an affiliate of the Ottos to give Developers Diversified a $60 million secured mortgage loan at a fixed interest rate for five years, the company said.
The Ottos will buy the Developers Diversified shares in two tranches — at $3.50 a share for the first 15 million shares and $4 a share for the second, the company said. The deal represents a premium of about 33 percent and 52 percent, respectively, to the closing market price of Developers Diversified shares on Friday.
As part of the deal, the Ottos also will receive five-year warrants to buy up to 10 million shares at $6 each — a premium of 128 percent to Friday's share price.