Canary Wharf in discussions with Morgan Stanley

The Independent Committee of Canary Wharf Group PLC said it is working with the Consortium led by Morgan Stanley Real Estate Fund IV International limited partnerships and 14 pct shareholder Simon Glick on the full terms and conditions of an offer for Canary Wharf at 265 pence per share.

Canary Wharf said it has now received from the Consortium a proposal to make an offer for the company at this price and the Committee has concluded that it would be willing to recommend that shareholders accept such an offer.

The key terms proposed are a basic offer comprising 220 pence in cash and 45 pence in limited voting shares ('Class B Shares*') in the new parent company of Canary Wharf.

There would also be a mix and match facility available under which Canary Wharf shareholders can elect to vary the proportions in which they receive cash and Class B Shares in respect of their holdings of Canary Wharf shares.

In addition, a cash alternative would be available for 100 pct of the share consideration, ensuring that shareholders, who wish to do so, would receive consideration of 265 pence in cash in respect of each Canary Wharf share.

The Class B Shares would represent approximately 33 pct of the share capital of the new parent company of Canary Wharf and are expected to be formally valued at 45 pence in the offer document.

Canary Wharf said a further announcement will be made as soon as practicable and it stressed that this announcement does not represent a firm intention from the Consortium to make an offer for Canary Wharf.

An unsourced report in today´s Financial Times said Prince al-Waleed Bin Talal is considering joining the consortium led by Morgan Stanley. The Saudi prince, a billionaire investor and one-time shareholder in Canary Wharf, is understood to have held talks with Morgan Stanley, the newspaper said.

It added that the move would come as a blow to Paul Reichmann, who last month stepped aside as chairman of Canary Wharf in order to launch a bid. Prince al-Waleed and Glick backed Reichmann when he bought Canary Wharf from its creditors in 1995 for about 800 mln stg. Reichmann, who owns a 7.7 pct stake in the group, held talks with Prince al-Waleed about joining his consortium. He has also held discussions with a number of banks and insurance companies but has had trouble finding backers, according to the FT.

Both Morgan Stanley and Reichmann face possible competition from Brascan, a Canadian property company that owns 14 pct of Canary Wharf and is forming its own consortium.

Brascan, which is being backed by principal Canary Wharf shareholders including Franklin Mutual Advisors, with 6.8 pct, and UBS, with 1.8 pct, has support from investors owning at least 18 pct of Canary Wharf.

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