By Andries Mahlangu

US-based Simon Property Group announced on Wednesday that it has reached agreement on the financial terms of the loan facility - valued at £3 billion - which would enable it to make a firm offer for Capital Shopping Centre (CSC).

A consortium of banks led by Citi, Deutsche Bank, Goldman Sachs and Morgan Stanley is arranging the facility, with the definitive documentation expected to be completed next week.

Simon said it has obtained the approval of its board for the bid and is continuing efforts to seek engagement with the CSC board.

Simon, which owns an interest of around 5% in the UK-based CSC, has offered 425 pence per share in cash for the UK-and JSE-listed retail property focused group.

But, the CSC board rejected the offer, arguing that this was yet another attempt by Simon to frustrate its proposed acquisition of the Trafford Centre without putting forward a proper proposal for shareholders to consider as an alternative.

Capital plans to buy the Manchester shopping centre for £1.6 billion, which Simon opposes on the grounds that the transaction is substantially over valued, and would diminish shareholder value.

Capital is to hold an extraordinary general meeting on 26 January 2011 to decide the future of the centre.

On the other hand, Simon has until 12 January 2011 to provide a firm offer or withdraw. The UK-based regulatory body Takeover Panel set the deadline earlier this month.

The Trafford Centre, located near Manchester, is regarded as one of the UK's most successful retail and leisure destinations attracting 35 million customers visits annually.

The Capital board reckons that if the deal goes through, it would deliver improved total returns for shareholders.

Source: I-Net Bridge