Qatar Holding LLC aims to become the largest shareholder in Songbird Estates (owner of much of London’s Canary Wharf office complex), the investment arm of Qatar Investment Authority said on Friday.
“Qatar Holding has today announced that following the proposed equity issue and loan repayment by Songbird Estates Plc ... it intends to become the largest shareholder in the company,” the group said in a statement.
Qatar Holding on Friday joined China Investment Corporation to subcribe to £275m ($447.9m) in preference shares issued by Songbird.
British Land, also one of the original shareholders, faces significant dilution having opted not to take part in the fully underwritten placing. Qatar will become the largest shareholder in the group, with a stake at just below the 30 percent threshold.
Songbird is raising funds to purchase and repay senior loan facilities with US bank Citi and the sale would make the two sovereign wealth funds its largest shareholders with about one-third of its shares.
Songbird Estates, which plunged into a £1.8bn loss last year amid the commercial property slump, agreed to raise equity financing to safeguard its future. Analysts say the fundraising will be the biggest ever seen in the property sector.
David Pritchard, Songbird’s chairman, said that without the refinancing the company would have been unable to pay back its loan: “Very likely we would have gone down the path of liquidation. This deal puts us on to a sound financial footing and demonstrates a very strong vote of confidence in Canary Wharf.”
In addition to ordinary shares, Qatar and CIC will take £275m of non-voting and non-convertible preference shares. The loan will be repaid at a 5 per cent discount, meaning that the company will raise about £836m. The ordinary shares will be issued at 1p. Pritchard said that if this deal had not been agreed, the most likely outcome would have been the administration and liquidation of Songbird Estates. He added that British Land was pursuing a different long-term strategic direction.
Qatar, MSREF, GF and CIC have committed to deposit £150m into an account as an initial payment within the next two working days as part of that equity commitment. The company intends to simplify the existing share capital structure into a single class of ordinary shares.
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