Brookfield Confronts Villar Mir in Fight For Colonial

16/01/2014 – El Confidencial

It is yet to be seen whether Colonial ends up in Villar Mir´s hands or not. Canadian giant Brookfield, managing over $175.000 million, has decided to face up to the Spanish businessman and try to gain control over the real estate firm. A week before the shareholders meeting when the capital enlargement of €500 million proposed by a consortium of Santo Domingo (Colombia) and Mora (Andorra) is to be approved, the war unleashed between those two and triggered a share price irrationally.

At present, Brookfield´s power lies in debt. The Canadian fund manages directly or indirectly (sindicate loans) about 75% of Colonial´s €2.100 million debt. A large part of it (€1.800) expires in 2014. In order to enter the real estate firm´s holding through the back door, Brookfield disembursed about €1.000 last year to buy liabilities. Moreover, it is supported in the strategy by Orion Capital.

The fear of Brookfield and Orion taking control over Colonial pushed Villar Mir to buying 19% of the firm for unconsciable price of €1 per asset, a double price of the amount foreseen for the fresh capital input of €300 million. (…).

Refinancing the €1.800 debt puts Brookfield on a firm position. The possibilities for its next steps crop up, casting a real threat to Villar Mir (…).

Original article: El Confidencial (Carlos Hernanz)

Translation: AURA REE