General Electric interested in property firm Colonial

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US giant eyes 'possible operation' for troubled company.

22 January 2008

MADRID - US giant General Electric on Monday indicated it might make a bid for troubled Spanish property company Inmobilaria Colonial, which has lost some two-thirds of its value in the past six months amid a downturn in the domestic housing market.

In a brief statement to the Spanish Securities Commission (CNMV), GE's Spanish and Portuguese property division GE Real Estate Iberia said it was "studying a possible operation" regarding Colonial but had so far not taken any decision regarding this.

It said it would need detailed financial, tax and legal information about the Spanish firm before making any moves.

The CNMV briefly suspended trading in Colonial's shares. The stock closed up 1.33 percent at EUR 1.52 after at one point having risen by over 6 percent. Colonial was only one of two gainers in the Spanish blue-chip Ibex 35 index, which had a dire day along with stock markets worldwide. The benchmark index dropped 7.54 percent.

Colonial's stock shed 62 percent last year, and prior to yesterday had fallen a further 20 percent this year. In the last two trading days of 2007, its share price plunged about 40 percent, prompting company chairman and leading shareholder Luis Portillo, along with other directors, to stand down.

Colonial has also held exploratory talks on some sort of tie-up with French real-estate firm Gecina, whose chairman, Joaquín Rivero, is the former chief of Metrovacesa, Spain's largest property company.

The property company has assets in the shape of offices and shopping malls in Madrid, Barcelona and Paris worth an estimated EUR 12 billion. Its current market capitalisation is only about EUR 2.5 billion.

The company is also saddled with heavy debts of about EUR 8.9 billion at a time when the current credit crunch sparked by the meltdown of the US subprime mortgage market has pushed borrowing costs higher.

Colonial sold assets worth EUR 839 million last year to reduce its debt and its planning to bring in a further EUR 700 million of funds by reducing its stake in French real-estate firm Société Foncière Lyonnaise to below 60 percent before the end of this year from 84.5 percent at present.

[Copyright EL PAÍS / A. SIM 2008]

Subject: Spanish news

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