|
Madrid: Investment Corporation of Dubai (ICD) said on Tuesday it had signed a deal with shareholders in Spanish property group Colonial to buy the firm's rental assets, valued at over nine billion euros ($14 billion).
The sovereign wealth fund, which first opened Colonial's books in February, is offering 1.19 euros cash per share for Colonial's rental business, but the deal is conditional on the indebted firm renegotiating financing with its creditors.
ICD's proposal involves Colonial first being split into two companies. It would then buy Colonial's profitable rental business, based on office units in Paris, Madrid and Barcelona, leaving the land and housing unit to be relisted. Under the deal, shareholders will receive shares in the new company.
Colonial's main shareholders are former Chairman Luis Portillo and the Nozaleda family, which together own 52 per cent of the company.
The land and housing assets left by ICD in the new company would be worth around 2.1 billion euros but are saddled with net debt of 962 million.
"It's good for the company to have a stable and solid shareholder and to end this uncertainty," said a spokeswoman for Colonial after ICD announced its offer to the Spanish stock market regulator.
Offer price
ICD said its offer price could change after the company splits into two, depending on the final share of debt which it has to shoulder.
Colonial has total net debt of nine billion euros, the largest part of which is a 7.2 billion euro syndicated loan with Goldman Sachs, Royal Bank of Scotland, Eurohypo and Calyon an arm of Credit Agricole.
The latest bid by ICD is conditional on ICD reaching an agreement on the refinancing of Colonial's debt by March 19, a condition analysts up to now have considered a stumbling block.
Conditions: Unit should be split
- Colonial will split its land and property development unit from the listed company with current investors taking shares in the new spin-off. Such a deal would need approval at a shareholders' meeting.
- ICD will buy at least 50 per cent of Colonial shares after the split for 1.19 euros each. That price could change depending on the value of the debt and assets moved to the land unit.
- The deal document says that at the end of 2007, the land and development unit had assets worth 2.1 billion euros and net debt of 962 million.
- If and when ICD has 50.4 per cent of Colonial, it will launch a takeover bid for the rest, complying with Spanish law.
- Shareholders must by March 19 reach satisfactory agreement with banks and other groups that have any rights on shares to be sold to ICD. The two main shareholders - Luis Portillo and the Nozar group - have used some of their shares as collateral on loans.
- ICD must by March 19 reach binding agreement with banks on refinancing Colonial's debt.
- Both sides must by March 19 provide bank guarantees to cover deal obligations.
- Colonial board must approve the deal. The board is due to meet today.
- Another set of conditions needs to be met within five months of the deal being declared valid for the sale to go through. They are ICD must be able to buy at least 50 per cent of Colonial shares; Colonial shareholders must agree to spin off the land and development unit within five months with a possible extension of two months if necessary. They must also list the new spin-off on a regulated market; Authorities must approve ICD's acquisition.
- Senior and junior debt and other financing deals and instruments must be renewed with ICD's approval.
|
