MRV Plans Follow-On

MRV, the Brazilian low-income residential real estate developer, plans to issue up to BRL550m in shares, according to a statement filed with the CVM. The company is planning between BRL250-BRL450m in new shares, and BRL70m-BRL100m in secondary securities. The offering will represent 10%-12% of the company’s total capitalization and Credit Suisse and UBS Pactual are leading, says MRV. “This news reinforces our view that growth expectations are improving and probably much faster than expected,” says JPMorgan. “We estimated that MRV would be [free cashflow] positive next year, and with leverage at only 24% in Q1 we believe that it is quite early to raise equity now, so we would need more information from the company to understand its plans for this money,” it adds. In the month through May 29, MRV shares rose 46%, topping the list of performance for listed real estate companies in the region, says JPMorgan. The shares close Tuesday at BRL24.20, down 7.3%, much steeper than the 0.9% retracement in the Bovespa. The company’s July 2007 IPO priced at BRL26.00. In April, MRV approved a sale of BRL200m in long and short-term debt. Half the amount is set to come in 3-month promissory notes, with the remainder in 2011 debentures. Both are set to price at DI plus 3.7%, says MRV.