Struggling Swedish landlord SBB took a major step toward stabilizing its finances after agreeing to sell a further stake in a portfolio of school buildings to Canada’s Brookfield Asset Management Ltd.
(Bloomberg) — Struggling Swedish landlord SBB took a major step toward stabilizing its finances after agreeing to sell a further stake in a portfolio of school buildings to Canada’s Brookfield Asset Management Ltd.
Samhallsbyggnadsbolaget i Norden AB — as the company is officially known — agreed to sell 1.16% holding in the education division to Brookfield, making the Canadian investor the majority shareholder after it already owned 49% of the unit called SBB EduCo AB.
The transaction will see SBB get a cash injection of 8 billion Swedish kronor ($720 million) as a result of a part repayment of a 14 billion kronor inter-company loan that was put in place in 2022 when Brookfield first became an owner in EduCo, according to a statement on Sunday evening.
The development marks the first significant breakthrough for SBB Chief Executive Officer Leiv Synnes, who replaced embattled founder Ilija Batljan in June. SBB, which owns schools, elderly care homes and other public-sector buildings, put itself as well as its entire portfolio up for sale as it tries to manage an $8 billion debt pile amid sharply rising interest rates.
That strategic review into SBB has now concluded along with the Brookfield announcement, the company said. As part of a new group structure that will comprise three units in eduction, community and residential, SBB EduCo will become an associate company rather than a subsidiary of SBB, allowing the unit to raise financing and secure a credit rating on a standalone basis.
“SBB benefits from establishing majority or minority-owned business units that can autonomously raise both equity and debt capital,” CEO Synnes said in the statement.
Synnes — an industry veteran who ran the books at rival Swedish landlord Akelius Fastigheter — has refreshed SBB’s management team with a new finance chief and treasury director. The internal promotions have done little to calm investor concerns. The company’s bonds and shares have languished near record lows in recent weeks without clear progress on easing the financing crunch.
SBB abruptly ended talks in July with Brookfield over the sale of the 51% stake. That deal was widely seen by the market as key for the ailing landlord as it raced to plug a funding shortfall of 8.1 billion kronor over the next 12 months. Prior to Sunday’s announcement, the company had struck deals with Morgan Stanley — through the sale of preferential shares — and some of its tenants to help plug that gap.
“We are establishing a new decentralised organisation with the goal of enhancing SBB’s transparency and expanding funding options,” the CEO said.
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