Alexa

Spain's Colonial gets euro2.98 billion (US$4.48 billion) offer from Invest Corp. Dubai

Spain's Colonial gets euro2.98 billion (US$4.48 billion) offer from Invest Corp. Dubai

Investment Corporation of Dubai said Wednesday that it has made an offer for Spain's Inmobiliaria Colonial SA, valuing the ailing real estate company at euro2.98 billion (US$4.48 billion).
The offer, equal to euro1.85 (US$2.78) a share, also allows shareholders to get bonds representing euro2.25 (US$3.38) a share, Investment Corp. of Dubai, or ICD, said in a filing to the Spanish market regulator. The bonds will be for four and a half years, the company added.
For Colonial, the Dubai-based investment company bid was considered the last potential lifeline left for a company that has become crippled by a soaring euro8.6 billion (US$12.94 billion) debt and the high leverage of the company itself.
The deal coincides with a change in cycle of the Spanish real estate sector, a once-booming industry that has fallen on hard times and is squeezing the players hard that did not invest assets in other sectors before the slowdown.
Spanish housing prices have more than doubled since 1997. Spain built more homes in 2006 than France, Germany and Britain combined _ setting the sector, as well as the wider economy, up for trouble when easy credit dried up, interest rates rose and demand for new homes waned.
Colonial's shares have lost about 70 percent of their market value over the past few months but have stabilized in recent weeks on hopes of a formal bid. They closed Wednesday at euro1.57 (US$2.36), down 7.7 percent.