OSLO (Reuters) -SBB’s shares and bond rose sharply on Monday after the Swedish property group secured an 8 billion crown ($719 million) cash boost and said it would reorganise its business.
“SBB intends to use the cash to address near-term financial commitments, including agreed investments, dividends, and debt maturities,” it said in a statement on Sunday.
Under pressure to cut its debt amid soaring interest rates, SBB said in May it might sell all or parts of its business, but talks to divest its remaining 51% stake in education unit EduCo to Canada’s Brookfield Asset Management later collapsed.
SBB said on Sunday it had instead agreed to sell a 1.16% stake in EduCo to a unit of Brookfield for 242 million crowns, and will also receive repayment of an inter-company loan.
“The fact that SBB is freeing up 8 billion crowns must be seen in a very positive light.
In a crisis, it is almost all about having liquidity, and SBB is getting it now,” Carlsquare analyst Bertil Nilsson said.
SBB’s bonds rose sharply, according to data from Tradeweb, as investors welcomed the EduCo stake disposal, which will help address looming debt maturities.
The price of a 559 million euros high yield bond maturing in February 2024 was up by five cents in the euro to 94, while a 413 million euros bond due January 2025 rose six cents in the euro to 84, data showed.
The transaction, which SBB aims to close in October, will make Brookfield Super-Core Infrastructure Partners majority owner of EduCo, with the Swedish firm left with a 49.84% stake.
SBB, which had seen its shares plunge 95% since early 2022 on concerns over its viability, also presented a decentralised structure to boost its transparency and funding options.
“SBB now shifts its focus towards execution,” SBB board Chair Lennart Schuss said.
The group will in the future consist of three separate property business units, of which EduCo is minority owned and will no longer be consolidated into the group’s balance sheet.
EduCo, which after the transaction will still owe 5.5 billion crowns to SBB, aims to eventually finance itself solely through the long-term capital market, the Swedish group said.
After giving up some early gains, SBB’s shares were up 30% at 3.92 crowns at 0859 GMT.
($1 = 11.1296 Swedish crowns)
(Reporting by Terje Solsvik, Jesus Calero and Chiara Elisei, editing by Anna Ringstrom and Alexander Smith)
