Gecina plans 'definitive abandonment' of split-up plan

French property company Gecina said it is considering the 'definitive abandonment' of the separation plan agreed with Spanish parent company Metrovacesa in February 2007. In a separate statement on Wednesday, Metrovacesa said that, as a member of Gecina's board, it has not approved the decision taken by Gecina and has instead showed visible objection to the rights of such a resolution. The Spanish company added that the two companies should do whatever is possible to fulfill the agreement.

In its statement on Wednesday, Gecina said its board has looked into the feasibility of the plan and considered implementation 'would be against the company's best interests' and 'would lead to an unacceptable situation for the company'. Gecina's decision was taken on the basis of an analysis carried out by banks Calyon and UBS.

'Noting that Gecina is not a party in this separation agreement and is therefore under no obligation to implement the operations provided for in it, the Board of Directors has decided to definitively abandon the implementation of the separation agreement,' the company said. The separation agreement was signed in early 2007 by Metrovacesa's former main shareholders, Joaquin Rivero and the Sanahuja family, and not by the two companies, Gecina argued.

Metrovacesa currently holds 27% of Gecina. Under the break-up plan, which was signed before the onset of the credit crisis, Rivero, formerly Metrovacesa's largest shareholder, would end up with control of the group's French assets while the Sanahujas would retain control of the Spanish arm. Earlier this year, the Sanahujas handed over their stake in Metrovacesa to six Spanish banks after failing to meet debt payments.