MEDITERRANEAN resort developer Dolphin Capital Investors (DCI) is offering its shareholders 50% off the price of its luxury holiday homes in return for shares.
The company, which builds across southeast Europe and owns Cypriot developer Aristo, says the ‘shares for assets’ scheme will allow it to buy back shares at a significant discount because its properties are currently worth much less than the equivalent shares. The firm hopes this will help drive up demand for the shares and therefore their value.
The scheme was first trialled last May, when 39 Aristo properties with a total cost value of €4.2 million and with a total sales value of $8.8 million were exchanged for 9.3 million shares valued at €23.4 million.
“The company was very pleased with the first ‘test-run’ of this programme because it proved that this pioneering scheme that was never used by any listed company before, works,” said Michael Tsirikos, chief operating officer for Dolphin Capital Partners (investment manager to DCI).
“The company’s directors have decided on the principle that the SfA programme will be re-launched in the future and potentially on a larger scale, given the very positive effect of the pilot scheme for the company and the feedback that we got from our shareholders,” he told OPP.
DCI has also launched a programme to sell the company’s off-plan show villas to its shareholders at cost price, as long as they own shares of an equivalent market value. This will allow the firm to build show villas without the need for additional capital.
Falling value
The announcement was made as part of the firm’s full year results, which also showed the company’s net asset value (NAV) as €1.343 billion, representing a decrease of €67 million (4.7%) from 30 September 2009 due to operating losses and falling property values. The results said the firm had no bank debt at company level and no or very limited bank debt on 11 out of 13 major projects.
Dolphin’s portfolio is spread over 63 million square metres of coastal developable land and includes 13 large-scale residential resorts under development in Greece, Cyprus, Croatia, Turkey, Panama and the Dominican Republic. It also has more than 60 smaller holiday home projects through Aristo in Cyprus and Greece.
The usual rule apply: It sounds too good to be true.