Hypo shareholders approve takeover

Bloomberg

Germany’s bank rescue fund, Soffin, which already owned more than 47 percent of Hypo Real Estate, will inject 2.96 billion euros ($4.2 billion) to take full control, the company said in an e-mailed statement. Investors approved the plan at an extraordinary meeting Tuesday.

Hypo Real Estate almost collapsed in September after its Dublin-based Depfa Bank unit couldn’t raise short-term funds amid the credit crisis. The company needed 102 billion euros of credit lines and debt guarantees from the government and the country’s financial institutions, and will require more aid even after the capital infusion approved Tuesday.

While the capital increase "is a vital part of the whole recapitalization of the company, it’s not sufficient," Chief Executive Officer Axel Wieandt told shareholders at the meeting in Munich Tuesday. He didn’t estimate the amount required.

The plan to nationalize Hypo Real Estate has been opposed by investors including New York-based buyout firm J.C. Flowers & Co., which bought a stake in the company last year for 22.50 euros a share. The stock stood at 1.46 euros Wednesday morning in Frankfurt trading.

"Further capital aid can realistically only come from the German government," Wieandt told shareholders. "We don’t have other proposals by third parties that would guarantee an adequate recapitalization of the lender." Asset sales or the use of a so-called bad bank aren’t suitable, he said.

Following the capital increase, Soffin will hold 90 percent of Hypo Real Estate and will force remaining investors to sell their stock in a so-called squeeze-out, it said in a statement on its Web site. Such a step requires shareholder approval, which could be sought at Hypo Real Estate’s next annual general meeting on Aug. 13. Germany also approved legislation in April that would allow it to seize Hypo Real Estate as a last resort.