By Introduction
Swedish property group, Samhaellsbyggnadsbolaget i Norden (SBB), plans to buy back debt worth up to 600 million euros ($650.9 million) as a strategic move to reinforce its balance sheet. SBB had previously acquired a vast portfolio of public properties, including social housing, healthcare facilities, schools, and government buildings, resulting in substantial borrowing. However, the company has faced challenges due to rising interest rates and has consequently begun selling and spinning off sections of its portfolio to generate cash.
Brookfield Deal
In a recent notable development, SBB unveiled an agreement that would grant Canadian real estate investor Brookfield Asset Management majority control over its Nordic education buildings portfolio. In exchange, SBB will receive approximately 8 billion Swedish kronor ($757.9 million) in cash. This deal plays a crucial role in assisting SBB with its debt buyback initiative, as the proceeds will be utilized to finance the repurchase.
Debt Buyback Plan
SBB announced on Thursday its intention to invite holders of various debt securities to tender their holdings for purchase through an auction. The prices for these holdings will be determined during the auction process. However, the successful completion of the Brookfield deal is a prerequisite for any agreement regarding the debt buyback.
Objective
Through these debt buyback offers, SBB aims to proactively manage its balance sheet while optimizing its overall wholesale funding level and future interest expenses.
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