Colonial: Creditor banks backing us - Emirates24|7

Colonial: Creditor banks backing us

Heavily-indebted Spanish property group Inmobiliaria Colonial said on Sunday it has the backing of its major creditors to continue doing business, as it forecast improved financial results for 2008.

"Colonial's creditor banks have riterated their confidence in the development of the company," it said.

"Colonial understands that confidence in the potential of the firm is the major factor in the creditors' decision to invest in its continued activities," it added in a statement.

Colonial - which own offices and malls in Madrid, Barcelona and Paris - was more than EUR8.9 billion (Dh50.5bn) in debt at the end of 2007, raising concerns over its financial health.

A possible deal with the Dubai sovereign fund ICD fell apart on March 11 amidst disagreement over the terms of sale.

The creditor banks in question are Goldman Sachs of the United States, Germany's Eurohypo, France's Calyon Credit Agricole and Britain's Royal Bank of Scotland. Together they are owed EUR6.4bn.

Colonial's problems have been exacerbated by question marks over the financial situation of its two principal shareholders -- former chairman Luis del Rivero and the Nozar group.

But on Sunday, the group said it expected a significant increase in results in 2008.

"The predictions for the current financial year, according to the available data, point towards an increase in year-on-year terms" for turnover and operating profits, the group said.

In 2007, operating profits were up 175 per cent from a year earlier at EUR400.3 million on a turnover of EUR840.3m.

Uncertainties linked to the possible purchase by ICD delayed Colonial's sale of a 33 per cent stake in Societe Fonciere Lyonnaise (SFL), in which it holds an 84 per cent stake.

Colonial, whose share value has fallen by almost half since December, said the "objective value of its assets is clearly higher than it appears". It added that the market "market will recognise its real value" once stability returns. (AFP)