The troubled property development company Songbird Estates (AIM: SBDB) said it has received acceptances for 59.6% new ordinary shares issued under a compensatory open offer announced last month along with an issue of preference shares and a credit facility to raise a total £1.03 billion and repurchase the £880 million loan facility from Citigroup.
Songbird’s brokers J.P. Morgan Cazenove and Morgan Stanley will now be looking for subscribers for the remaining 7.66 billion shares through the rump placing.
The owner of the majority of Canary Wharf was aiming to raise a total £190 million through the compensatory open offer as part of a package of measures to raise £1.03 billion to help it pay off an £880 million loan from Citigroup after the value of its properties declined £1.8 billion last year.
Should Songbird fail to raise enough money to pay off the loan, Qatar Holding, Morgan Stanley Real Estate Funds, GF Investments and China Investment Corporation, all of which subscribed to the placing, will have until 20 October 2009 to purchase the Citi facilities.
Shares in Songbird, which recently increased its ownership of Carary Wharf to 69%, plunged 17% on the news.