(Corrects share price in fifth paragraph)
* Building magnate Villar Mir to inject 300 mln euros fresh
* Restructuring to precede new funding
* Property market shows signs of recovery
MADRID, Jan 2 Investors from Spain, Andorra and
Peru will inject 500 million euros ($689 million) of fresh
capital into bank-owned Spanish property developer Colonial
in the latest sign that the real estate business may be
The Villar Mir group, a family-owned company controlled by
the chairman of Spanish builder OHL, will invest 300
million euros in Colonial, the property company said on
Peru-based Grupo Santo Domingo will invest 100 million euros
and Andorran company Amura Capital another 100 million euros, if
the board approves a debt restructuring and recapitalisation
plan in an extraordinary shareholder meeting on Jan. 21,
Colonial said in a statement to securities regulator CNMV.
The investors subscribing to the capital increase have also
stipulated that it take place at a price no higher than 0.50
euro per share versus Tuesday's close at 1.047 euros.
Trade in Colonial shares reopened after a suspension, and
after an initial blip higher closed down 17.29 percent at 0.866
euro per share.
Dozens of property firms collapsed in Spain after a property
bubble burst and the country's banking system - highly exposed
to the real estate market - took a 41-billion-euro rescue loan
from Europe in the wake of the crisis.
Colonial's shares are owned by banks, which took it over
after it struggled with debts in the wake of the 2008 crash.
Spanish property prices rose on a quarterly basis in the
third quarter of 2013, the first such increase in three years.
Prices have slumped some 37 percent since mid-2007.
Several banks have sold or contracted out property
management businesses this year, capitalising on interest from
foreign investors hungry for deals.
Colonial has a 1.759 billion euro syndicated loan due in
December 2014, and that must be renegotiated as a condition for
the investment, it said.
Another condition is that Colonial not reduce its stake in
French property investment firm Societe Fonciere Lyonnaise (SFL)
to below 20 percent from the current level of 53.5
Also, the new investors say Colonial must reduce to at most
20 percent its stake in Asentia, a unit created in 2011 to house
real estate assets that have lost most of their value.
In order to bring in the new investors, Colonial will first
reduce capital, cutting the value of its shares to 0.25 euro per
share, according to the proposal to be presented to
Then it will offer current shareholders a capital increase
via a regular rights issue of up to 1 billion euros, it said,
and also offer the conversion of 500 million euros of bank loans
into equity, in case the capital increase is not fully
Following that process, the new investor group including
Villar Mir will come on board.
Juan Miguel Villar Mir, chairman of builder Obrascon Huarte
Lain and the privately held Villar Mir group, is one of
Spain's richest men due to a construction empire built up after
he was finance minister in the mid 1970s.
($1 = 0.7257 euros)
(Reporting by Fiona Ortiz, additional reporting by Elisabeth
O'Leary; Editing by Anthony Barker and Tom Pfeiffer)