Dubai's new colony

27 Feb 2008 By George Hay Follow @gfhay

The emirate s sovereign wealth fund has offered shareholders in the troubled Spanish property firm a miserly cash premium or a bond that pays no cash for four years. It s not so great for Colonial shareholders. But they don t have much bargaining power.

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The Investment Corporation of Dubai has made a conditional offer for Inmobiliaria Colonial, one of Spain's largest property firms.

The sovereign wealth fund has offered to buy 50.1% of the company, by buying out its major shareholders Luis Portillo and the Nozaleda family, as well as a number of smaller shareholders.

ICD has given the shareholders a choice. They can either trade each share for E1.85 of cash now, which represents an 8.8% premium to Colonial's closing price of E1.70 on February 26. Alternatively, they can receive a bondlike security that will mature in four and a half years time at E2.25 per share.

The major shareholders have been given until February 29 to accept ICD's terms.

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