Other Suitors Reported Seeking Beleaguered Colonial
- Mar 31, 2008
Though plans by Investment Corp. of Dubai to buy Spanish real estate giant Inmobiliaria Colonial SA have been given the deep-six, there are apparently other bidders eager to get a piece of Madrid-based Colonial or its assets. Colonial CEO Mariano Miguel, speaking on Bloomberg Television earlier today, alluded to messages “on my Blackberry” about interested investors, but did not name them.
Thompson Financial, citing reports in the Spanish publication El Economista, said this morning that Fomento de Construcciones y Contratas SA (FCC) had devised a plan under which a consortium of six investors would each buy the 15 percent stake that Colonial holds in the Barcelona-based FCC, a major construction firm. The sale would represent an infusion of some cash for Colonial, though how much is yet to be determined.
According to El Economista, the sale wouldn’t be as much as former Colonial chairman Luis Portillo paid in 2006 for the stake (78 euros per share), but it would be more than the current stock price of about 41 euros per share. Colonial current owes about 8 billion euros ($12.6 billion) to various creditors, including Calyon, Eurohypo AG, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc.
The company’s largest stockholders are compelling it to find a buyer, and as reported previously by CPN, Investment Corp. of Dubai, the investment arm of the government of the Gulf state, had been in on-and-off negotiations for some months over a sale. Colonial’s debt ballooned in the last few years mainly due to acquisitions, including Madrid-based mall developer Riofisa SA, and the aforementioned stake in FCC.
About a year ago, the residential property market in Spain began a sustained downturn after many years of growth, catching Colonial without a good means to pay down its debt. Currently Colonial holds about 12 billion euros worth of real estates of various kinds, including offices and malls in Madrid and Paris, and it is also a major residential developer. Its stock price collapsed last year, leaving the company with only about 1.5 billion euros in market valuation.