Olympia & York to Sell Off Interest in Santa Fe Pacific
Olympia & York Developments Ltd., rushing to raise cash to fend off bankruptcy, prepared Tuesday to unload a big piece of its global empire, an 18% chunk of a U.S. railroad that could fetch more than $400 million.
The world’s biggest commercial landlord disclosed plans to sell to the public its 32.5 million shares in Santa Fe Pacific Corp., a Chicago-based railway concern purchased five years ago.
The news was contained in a required filing by Santa Fe Pacific with the Securities and Exchange Commission in Washington. The filing said 26 million shares would be offered in the United States and the rest internationally.
Santa Fe Pacific shares closed Tuesday at $12.875, down 25 cents, in trading on the New York Stock Exchange. At that price, the value of Olympia & York’s stake equals about $418.4 million.
Olympia & York’s move to sell the railroad investment came one day after it revealed plans to sell unspecified properties to raise cash for vexing debts that have threatened to cripple the Toronto-based developer’s vast operations.
The company owes more than $12 billion to about 100 banks and already has proposed selling its 1-million-square-foot headquarters and a 64% interest in a Canadian oil company to help ease the crisis.
The asset sales are part of a broader strategy that Olympia & York has undertaken to renegotiate debts with bankers who are reluctant to keep lending the company money.
At the same time, the bankers recognize that the company needs hundreds of millions of dollars in cash to finance its operations and complete an enormous commercial development project on the outskirts of London known as Canary Wharf.
If Olympia & York doesn’t get the money, it could be forced to seek protection from creditors in bankruptcy court, a move it has sought to avoid.
The company said Tuesday that it will present a five-year detailed restructuring plan for its operations in North America and Britain to lenders at a special meeting Thursday in London.
In a statement, Olympia & York said it believed that “lenders will find the plan reasonable and form the basis for discussion with all lenders.”
Peter Rosenthal, a spokesman for the company, declined to elaborate on what the plan proposed.
On Monday, Olympia & York confirmed that it missed a Monday deadline for a $14.45-million interest payment on bonds secured by First Canadian Place, a 2.7-million-square-foot office tower occupied by the Bank of Montreal.
Olympia & York controls 45 million square feet of real estate around the world. Besides Canary Wharf and its Toronto properties, the company owns vast swathes of prime office space in Manhattan.
