Colonial plays down talk of further asset sales

Troubled Spanish property giant Colonial said on Wednesday it had not taken any steps to sell its 15% stake in Spanish construction company FCC. The company's statement was issued in response to a report in newspaper Cinco Dias that cited unnamed sources close to Colonial's board as saying it might shed the FCC stake to help reduce debt and stem a collapse in Colonial's share price. The paper also suggested Colonial might sell more than 24% of French real estate company Societe Fonciere Lyonnaise (SFL).

It was further reported that Colonial is seeking to restart merger talks with French property company Gecina. The paper said the Spanish company's shareholders had called for the talks to slow down to allow Colonial to sort itself out first. In its statement, Colonial emphasised that it had met its forecasts for 2007 and ruled out taking 'extraordinary measures'.

Colonial also said it was obliged by market rules to reduce its stake in SFL from 85% to below 60% by the end of the year.

Luis Portillo resigned as Colonial's chairman after the firm's shares went into freefall just days before market trading for 2007 closed. Colonial shares lost almost 40% in value in the two days to 28 December, prompting the company to issue a statement that Portillo had quit. Mariano Miguel Velasco, CEO of Colonial, will take over as chairman until a successor for Portillo is found.

As 2008 dawned Colonial was forced to shed assets to bolster its precarious financial position. La Caixa bank announced on 1 January that it was buying a tower block in Barcelona from Colonial for EUR 107 mln. This deal followed the announcement a day earlier that Spanish transport and communications infrastructure management group Abertis Logística had agreed to pay just over EUR 200 mln for several warehouse and logistics properties owned by Colonial in Madrid and Barcelona. The properties have a total surface area of 400,000 m².