Business | Investment
ICD in talks to acquire Colonial's rental unit
Colonial shareholders and Investment Corporation of Dubai (ICD) are discussing splitting up the company, with ICD buying the rental business.
- Reuters
- Published: 00:53 March 6, 2008
London: Colonial shareholders and Investment Corporation of Dubai (ICD) are discussing splitting up the company, with ICD buying the rental business, a source said on Wednesday.
Colonial's main investors, former chairman Luis Portillo and the Nozaleda family, would keep the land and development unit of the indebted Spanish real estate firm, the source said.
ICD would pay 1.2-1.3 euros a share for the rental property unit, which owns offices in Paris, Madrid, and Barcelona and generates the vast majority of Colonial's profit. "These are guidelines. There's no agreement yet," the source said.
Squeezed
Colonial, the result of a debt-fuelled merger between Inmocaral, Colonial and Riofisa, is one of several Spanish real estate companies being squeezed by the market slowdown and a sudden drying-up of funding during the global credit crisis.
A legal source said a company split would have to go before an extraordinary meeting and be approved by more than two thirds of shareholders, adding another layer of complexity to a bid where there are already several players.
"The other option could be for ICD to present an offer that includes the split," the lawyer said.
Any takeover deal has to be approved by banks that signed a 7.2 billion euro syndicated loan with Colonial last year, which will be renegotiated if control of the company changes hands.
Another set of banks lent Portillo and the Nozaleda family's Nozar group - who together own about 52 percent of Colonial -two billion euros to buy more stock, some of it based on the assumption that Colonial shares were worth three euros a share.
Shares losing value
Colonial shares, which have been bouncing around since ICD first declared its interest, rose as much as six per cent early yesterday on hopes the parties would reach a deal. By 1405 GMT, they had eased back to 1.18 euros, up 1.7 per cent.
The shares have slumped from levels of about 3.20 euros at the end of December, when shareholders had to unwind derivatives they held on the stock, which had lost value as the market turned sour on the suddenly slowing Spanish property sector.
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