This may be a false alarm, but it might just as easily be very bad news.
Shares in Inmobiliaria Colonial, Spain’s second-largest property group, were suspended abruptly on Wednesday morning, seemingly pending an announcement.
Now, that could be comforting. Dubai Investment Corporation, the SWF, has been conducting due diligence ahead of a possible bid. But it could also be uncomfortable – DIC has now been conducting due diligence for more than three weeks and said last Thursday that it needed more time to examine the books.
Meanwhile, having already breached its banking covenants, Colonial has been trying to renegotiate a €6bn syndicated loan with creditors led by Goldman Sachs, who could now seize control of the company. Colonial’s share price has also been seriously undermined by forced selling amongst some of its biggest investors, who backed an equity issue last summer through a complex swap arrangement that has since unravelled.
Luis Portillo, its chairman and controlling shareholder with 40 per cent, was forced out on New Year’s Eve along with a raft of other board members.
12 noon UPDATE:
DIC has said it is ready to make an offer for Colonial – pitched at €1.85 in cash or €2.25 in unspecified “financial instruments.” That compares with a market price of €1.70 before Colonial stock was suspended on Wednesday.
One important condition – DIC wants the agreement of Colonial’s creditor banks before it proceeds.