Brookfield launches restructuring offer for Spain's Colonial

MADRID Fri Jan 17, 2014 4:10pm EST

MADRID Jan 17 (Reuters) - Spanish property developer Colonial said it has received a debt restructuring and possible takeover offer from its biggest creditor, a unit of Brookfield Asset Management, ahead of an extraordinary board meeting next week.

The proposal from Brookfield, which holds 46 percent of Colonial's 1.8 billion euros ($2.4 billion) syndicated loan that matures in December 2014, is a rival offer to a proposed injection of capital announced two weeks ago by Spain's Villar Mir group.

Brookfield said it has the support of 77 percent of the company's creditors for its restructuring plan, in which it would subscribe to a capital increase and become a "significant shareholder" in Colonial, according to a statement from Colonial on Friday.

Canada-based Brookfield said that it has enough capital to launch an offer for all shares in Colonial, which would be obligatory under Spanish law if it acquired a stake larger than 30 percent.

Brookfield had made a previous offer that was not accepted.

Colonial was taken over by its creditors after it struggled with debt in the wake of Spain's 2008 property crash, when dozens of real estate companies collapsed.

A deal to recapitalise the company would be the latest sign that Spain's moribund property market has hit bottom. Property prices have slumped some 37 percent since mid-2007, but rose on a quarterly basis in the third quarter of 2013, the first such increase in three years.

Brookfield said its plan to restructure and pay off Colonial's debt involved selling off Colonial's entire stake in French property firm Societe Fonciere Lyonnaise (SFL).

The rival plan, from Villar Mir in conjunction with funds from Andorra and South America, involves retaining at least a 20 percent stake in SFL.

Villar Mir, a family-owned group controlled by the chairman of Spanish builder OHL, on Tuesday said it has purchased 19.33 percent of Colonial from Royal Bank of Scotland , at a price of 1 euro per share, for a total investment of 44 million euros.

Colonial shares closed down 7.14 percent on Friday at 1.3 euros per share.

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