After many months of negotiations, the real estate company Colonial has agreed to join Villar Mir by raising nearly a billion euros. Villar Mir will pump 300 million into the deal and put to rest doubts about Colonial's future.
The company had been struggling because of a situation with Asentia, the "bad bank" where it stashed its toxic real estate assets. On January 21, the company's board will present a capital raising deal to the government. Analysts expect the deal to go through considering that shareholders will keep their preferential shares even though they might not be worth the same after the deal. Villar Mir is repeating, to some extent, its deal with Abertis, when it looked for two partners to come up with the cash for the deal. In this case, Andorran investors have contributed 100 million and the Santo Domingo family from Colombia has agreed to front the other 100 million. These three investors will back the deal, providing a sure 600 million euros, which will undoubtedly allow the real estate company to solve financial problems that have been plaguing it for years. Villar Mir will no longer have majority control of the company because its ownership stake will be less than 30%. Still, focusing on the real estate business -- office spaces in particular -- is a good idea.
The CNMC is tasked with ensuring that the deal was clean and that there were no secret deals between investors. Still, it was a step in the right direction to refinance 2.1 billion euros of debt.
