Colonial may sell up to 33pc of SFL to cut debt levels

11 January 2008

MADRID – Beleaguered Spanish property company Inmobiliaria Colonial may sell as much as a 33-percent stake in its French unit Société Foncière Lyonnaise to raise funds to reduce debt, Chief Executive Officer Mariano Miguel said Thursday.

Colonial, which has lost about half of its market value since the end of last year, had previously indicated it intended to raise EUR 700 million from the sale of 24 percent of SFL. Speaking at a news conference after also recently being named chairman, Miguel said the sale of an additional 10 percent of the French unit would bring in another EUR 300 million.

Colonial currently owns 84 percent of SFL’s capital. The sale of a 33 percent stake would leave it with a controlling 51-percent interest.

Colonial is heavily leveraged, with debt at the end of 2007 of EUR 8.6 billion, of which EUR 150 million is due this year, and a further EUR 900 million in 2009.

Spanish real-estate firms are having to adjust to the end of a decade-long property boom in the domestic market. Colonial blamed the sharp fall in its share price on the unwinding of derivatives linked to its stock. Miguel said yesterday he could not rule out further falls in Colonial’s share price if more equity swap contracts are executed. Colonial’s share price closed yesterday up 1.53 percent at EUR 1.33.

Subject: Spanish news