SBB's $720 Million Lifeline Contains Future Problems
A complicated refinancing deal addresses short-term challenges for the poster child of Europe's real estate crisis, but many hurdles remain.
Chris Hughes is a Bloomberg Opinion columnist covering deals. Previously, he worked for Reuters Breakingviews, the Financial Times and the Independent newspaper.
Good news from beleaguered Swedish landlord SBB these days is rarely an unmitigated positive. Take Sunday’s deal with a fund run by Brookfield Asset Management Ltd. Samhällsbyggnadsbolaget I Norden AB – as the company is formally known – gets an 8 billion Swedish kronor ($720 million) sack of cash to cross a short-term financing hump. But it’s leaning on Brookfield’s credibility and making sacrifices along the way.
SBB has too much debt. In July, this poster child for Sweden’s property crisis warned that its cash needs over the next 12 months were 8.1 billion kronor higher than its liquid resources. The hope was that this would be alleviated by asset sales, principally the planned disposal of a 51% stake in its EduCo joint venture, a partnership with a Brookfield focused on school buildings and other education establishments. But the talks collapsed. Now we have this Plan B.
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SBB's $720 Million Lifeline Contains Future Problems