Reuters: Private Equity: PDG Realty board approves $393 mln capital plan

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PDG Realty board approves $393 mln capital plan Jun 4th 2012, 14:53 Mon Jun 4, 2012 10:53am EDT * Brazil homebuilder boosts capital to face market turmoil * Board extends lockup of new shares held by Vinci Partners SAO PAULO, June 4 (Reuters) - PDG Realty's board approved a plan to raise about 800 million reais ($393 million) in new capital, a move that should help Brazil's biggest homebuilder better face tighter credit markets and an economic slump. The plan, originally proposed by private equity firm Vinci Partners, was modified by the board to extend a lock-up period for new shares, according to a regulatory filing on Monday. Shareholders still have to approve the plan. The board "is trying to take a more conservative position in the face of a possibly adverse credit outlook and slowing Brazilian economy," PDG Realty said in the securities filing. The injection of new resources will improve the company's cash position and improve its capital structure, the board added. The prospect of new capital comes as the homebuilder struggles with cost overruns and project delays, hurting earnings and dimming hopes of trimming debt this year. Brazil's homebuilders rely on bank debt to finance projects, making them more vulnerable to credit shocks such as the 2008 financial crisis. Up to 81 percent of the new capital could come from Vinci Partners' investment funds, which could give the firm as much as a 21 percent stake in PDG Realty within four years. PDG's board modified the plan presented by Vinci last week, saying the buyout firm cannot sell the new shares it acquires for four years, rather than the two years originally proposed. PDG shares rose 2.1 percent in Monday trading, hovering above a three-year low. ($1 = 2.03 Brazilian reais) (Reporting by Sergio Spagnuolo and Brad Haynes; Editing by Lisa Von Ahn) Link this Share this Digg this Email Reprints

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