Colonial launches EUR 2b capital increase

Madrid-listed real estate firm Colonial is launching a EUR 1.95 bn capital increase in a bid to 'strengthen its financial structure in the long term and support the company's strategic plan'.

The operation, which will result in the issue of 16 million new shares at a price of EUR 0.12 per share, is part of an agreement the company signed earlier this year with its creditor banks for the restructuring of its debt. The capital increase was approved at a shareholders' meeting on April 20. The creditor banks include Royal Bank of Scotland, Eurohypo and Calyon.

In a statement, Colonial said it will use EUR 50 mln in proceeds for the ordinary running of the company's activities while any amount to be raised above this figure will be destined to reduce the company's leverage.

The share offering will be open for subscriptions until 19 June, with the company planning a second capital increase, should the first one not be fully subscribed.

Colonial, which is led by Pere Viñolas and 80%-controlled by its banks, is backed by its major financial shareholders in the operation. Last week, the company also announced plans to complete the Entrenúcleos urban development in Dos Hermanas, in a partnership with the municipality of Sevilla.