Paul Reichmann’s £1.6bn bid for Canary Wharf collapsed because of last minute financing changes by British Land Chairman and Chief Executive, John Ritblat, it was reported on Friday.
Sources close to the deal said that Ritblat was to contribute about £100m of equity and £250m of convertible preference shares to Reichmann’s bid, in return for an option to buy the estate’s retail developments.
However, late on Wednesday, British Land said it wanted £250m of its financing to go towards the shopping centres, leaving Reichmann £250m short of funding.
Reichmann could have proceeded without Ritblat’s support, but would have been so in debt he would have had to sell off part of the estate.
Reichmann will now support the Brascan Corporation’s proposed 267p-per-share bid, in order to trump Morgan Stanley’s 256p-per-share recommended offer for the company. He will now hand over his 9% stake in the company to Brascan in order to bolster its chances.
The former Canary Wharf Chairman has told the board that selling to Brascan would be a better course of action than selling to the Morgan Stanley-led consortium, which plans to sell of parts of the estate.
“If I had my choice, Canary Wharf would carry on” Reichmann said. “But once the company was put into play it was impossible to stop it.”
Source: Freeman News