China and Qatar funds inject new equity into Canary Wharf

Sovereign wealth fund, Qatar Holdings, is leading a consortium, which has agreed to provide a cash injection to head off a financial crisis at AIM-listed Songbird Estates, the majority owner of the Canary Wharf estate in London.

Songbird said in a statement on Friday that it had reached agreement with Qatar Holding, China Investment Corporation (CIC), Morgan Stanley Real Estate Funds (MSREF) and GF Investments II, (GF) to subscribe and underwrite an issue of ordinary shares and preference shares by Songbird.

The proceeds will be used to purchase and repay a £880 mln (EUR 999 mln) Citi senior loan facility at a 5% discount.

Commenting on the new deal, Songbird chairman David Pritchard said: 'It is a strong vote of confidence in Canary Wharf and its future prospects by two substantial long-term institutional investors and by existing shareholders. We welcome the commitment of such a strong and supportive group of investors and all our shareholders now have the opportunity to subscribe for shares in a financially transformed company which will be deleveraged by this transaction.'

Back in March this year, Songbird warned there was a material risk it might breach the covenants, threatening the financial viability of the company.

But on Monday, the Financial Times cited an unnamed source close to the talks as saying that Canary Wharf Group - which is 60% owned by Songbird - may seek to make new acquisitions. 'It will be able to keep its cash to invest in distressed real estate assets, or distressed companies, or into new developments,' the source said.