SBB, Brookfield end talks on EduCo stake sale, shares tumble

By Marie Mannes and Louise Rasmussen

STOCKHOLM (Reuters) -SBB and Brookfield have ended talks on the sale of SBB's remaining 51% stake in its education subsidiary EduCo, the Swedish property group said on Friday, sending its shares down sharply.

The breakdown in the talks is a big blow to Stockholm-based SBB which has been fighting for survival since its shares plunged in May on concerns over its financial position and a refinancing of billions of crowns in debt. Its shares are down more than 90% from their peak in 2021.

The company is looking at various options to improve its liquidity, including potentially selling all or parts of its business.

SBB, which owns community service properties and rent-regulated residential buildings, said in late June it had entered into discussions to sell its remaining stake in EduCo after attracting interest from Canada's Brookfield Asset Management.

Brookfield bought the other 49% stake from SBB in November of last year.

No other parties have been publicly named as potential suitors for parts of SBB's business.

SBB did not rule out that the discussions with Brookfield might resume at a later point in time.

Brookfield declined to comment.

Carlsquare analyst Bertil Nilsson said he thought talks between SBB and Brookfield had broken down because they were not able to agree on the price for SBB's EduCo stake, adding that Brookfield had supported SBB in the recent loan covenant dispute.

Nilsson said he did not think this meant much for other negotiations on the sale of SBB's properties.

"Rather, I think it illustrates that the difference in the perception of property prices between buyers and sellers is still quite large. It explains why transaction activity in the Swedish property market has been low so far in 2023."

SBB's new CEO Leiv Synnes disagreed that the talks between the two parties had ended over the price of its EduCo stake.

The CEO, who took over from former CEO and founder Ilija Batljan, pointed to recent deals the company had made and said this showed there were several different funding sources available to SBB and that they were running several parallel processes.

"In that context, it is important that we make the right decision, at the right time, and not rush", the CEO said in a statement to Reuters.

In June, Synnes ruled out any asset fire sale.

SBB's shares fell as much as 20% after the news of the talks with Brookfield falling through. At 1423 GMT they were down about 14%.

SBB's bonds also fell sharply on Friday after the news.

The company's credit ratings have been cut and the group has had to delay dividends and scrap a planned share issue.

(Reporting by Louise Breusch Rasmussen in Copenhagen and Marie Mannes in Stockholm, editing by Jason Neely, John Stonestreet and Jane Merriman)