Inmobiliaria Colonial SA (COL) fell the most since June 2012 in Madrid trading after Spain’s second-largest publicly traded property developer announced a plan to increase capital by as much as 1 billion euros ($1.4 billion).
The shares fell as much as 28 percent. Colonial will ask shareholders to approve the plan at a meeting on Jan. 20 or Jan. 21, the Barcelona-based company said today in a regulatory filing. Colonial plans to raise as much as 500 million euros of further capital through the conversion of loans, though it won’t be done in the event of a full subscription of the capital increase.
Colonial said it received commitments totaling 500 million euros from investors including Grupo Villar Mir and Grupo Santo Domingo. Grupo Villar Mir made a proposal to invest 300 million euros through a capital increase, while Grupo Santo Domingo and Amura Capital each agreed to invest 100 million euros, Colonial said in the filing.
The commitments are subject to conditions including the refinancing of a syndicated loan which currently stands at 1.76 billion euros, the maximum price of the capital increase was set at 50 cents a share with a commitment to not sell more than 20 percent of Colonial’s stake in French real estate investment trust Societe Fonciere Lyonnaise, the company said.
The investment conditions haven’t yet been met and no agreement has been reached on a debt refinancing with creditors, Colonial said. The company says it’s “reasonable” to assume it will reach a deal, given the interest shown by third parties.
Colonial fell more than 17 percent to 87 cents, the biggest drop since June 2012 and the lowest close since May 2.
“The shares are declining because the capital increase would imply a dilution,” said Francisco Salvador, a strategist at FGA/MG Valores in Madrid, “Given debt-repayment commitments for 2014 it seems like the only option.”
Grupo Villar Mir, an investor with interests ranging from fertilizers to construction, said last year he had as much as 300 million euro to acquire a stake in Colonial. Grupo Santo Domingo is a Latin American investment firm, while Amura Capital is an Andorra-based fund.
Colonial, whose shareholders include Commerzbank AG (CBK) and Credit Agricole SA (ACA), owns assets including office properties in prime locations of Madrid, Barcelona and Paris. The company has struggled with mounting losses and debt from its expansion during Spain’s real estate boom.
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