The Gulf sovereign wealth fund, Qatar Holdings, is planning to increase its stake in Canary Wharf owner, Songbird Estates, to a reported 30 percent.
According to a Bloomberg report, the fund is planning to purchase British Land’s rights to a new share issue, which was announced by Songbird last week. The deal would almost double Qatar’s stake in Songbird and leave it as the company’s largest shareholder.
On Friday, Qatar, along with Morgan Stanley Real Estate Funds, China Investment Corporation and Simon Glick’s GF Investments II, agreed to back a new rights issue by Songbird, which would pump more than £800 million into the company and prevent it from breaching a £880 million (€1 billion; $1.4 billion) Citi loan.
British Land, one of the original shareholders, opted not to take part in the placement.
The Financial Times also reported today that in repaying the Citi loan, Songbird – which owns 60.8pc of Canary Wharf Group – would leave itself with enough capital to acquire additional companies and properties.
Songbird was at risk of breaching loan-to-value covenants on the Citi senior loan. The company said it had negotiated to repay the principal and interest amount at a 5 percent discount, equivalent to around £836m. If Songbird is unable to complete the share issue, MSREF, Qatar, CIC and Glick will have the opportunity to buy the senior debt at the same discount. Together the four investors own a 72.2 percent stake in Songbird.
Had the deal not been agreed, the most likely outcome would have been the administration and liquidation of Songbird.
Qatar Holding, MSREF, Glick and CIC will also deposit £150m into an account as an initial payment as part of the equity commitment.
Songbird was set up by a MSREF-led consortium of investors, including Glick, Goldman Sachs and Prince Alwaleed Bin Talal, in 2004 after it successfully bid £1.7 billion for the London docklands district in 2004.