Colonial will try to refinance 3.000 million Euros.

The real estate company Colonial faces the year 2013-2014 with important changes in the horizon. After six years of financial and corporate stability, with several banks and international funds leading the company after the exit of the former president and main shareholder Luis Portillo, Colonial is working in a profound change in its structure.

Colonial´s managing director, Pere Viñolas, confirmed Expansión, at the beginning of 2013 that this year would be “problematic” for the company, and therefore a negotiation between banks and shareholders would be necessary.

The current situation of the company, as in any other Spanish real estate company, is serious due to the high debt it drags along since the years of the real estate boom. Its financial liability reached on the 30th June 4.916 million Euros.  A debt which is divided between its different business lines, as 2.100 million Euros correspond to their patrimonial activity in Spain, around 1.400 million Euros to the activity in France and 1.415 million Euros to its subsidiary Asentia, a company created to hold the more problematic residential assets, such as apartments and land, as well as the subsidiary for malls Riofisa.

Colonial established 2013 as the timeline to refinance around 3.000 million Euros of that debt, although only 139 million Euros are due in the second semester. The main problem would be the 1.800 million Euros it needs to pay in 2014, which will be impossible to return with biannual earnings of 100 million Euros.

With this situation in mind, Colonial is studying various alternatives. The first one would be to give way to new investors, with cash, in order to restructure the company. The main candidate is Villar Mir. The businessman, who controls the construction company OHL, has offered the acquisition of 30% of the capital of the company from banks. However, the negotiations which seemed well under way in March, now seem failed, and new candidates, such as Torreal and an international fund, are starting to sound.

The main hurdle for these negotiations seems to be the high debt of the group and in Asentia. For this reason Colonial would like banks to keep this subsidiary, exchanging debt for participative loans. But, in exchange creditors claim that the real estate company should give up the French company SFL, the jewel of its portfolio.

The sale of this subsidiary would mean important earnings for Colonial but would leave it without its main source of income, as 70% of its turnover comes from Paris. 70% of the values of its assets correspond to the French subsidiary. (…)