MILAN (Reuters) - Italian property company Risanamento will sell its crown jewels, nine high-end properties in the heart of Paris, to a UK-based fund to pay off debt and raise cash.
The board has given the final approval to an offer worth 1.23 billion euros (£1.02 billion) by Chelsfield/The Olayan Group, Risanamento said in a statement, confirming what a source had told Reuters earlier on Friday.
Italian bank UniCredit, a key shareholder and creditor of the property company, had warned Risanamento's future was at risk if the debt-laden group failed to sell its French assets, according to a document seen by Reuters.
"The transaction will bring around 230 million euros into the company's coffers, after having paid the debt related to the French assets," the company said in a statement, adding it expected to close the deal by the end of May.
Risanamento had total debt of 1.8 billion euros at the end of September. The company declined to say how much debt the sale would help it pay down.
The Milan-based group was the biggest Italian real estate casualty of the credit crunch of 2009, when falling property prices and the end of easy bank lending made its then 3 billion euro debt hard to sustain.
It escaped bankruptcy when a court made Italian banks Intesa Sanpaolo and UniCredit convert debt into equity to become its largest shareholders. The company's founder Luigi Zunino was left with a minority 25 percent stake held through companies under special administration.
The two banks are still the company's biggest creditors.
The French assets had drawn the interest of U.S. businessman Tom Barrack who last month launched a joint takeover offer of Risanamento with former owner Zunino.
The deal with Chelsfield is set to sink the joint bid, as the two investors were mainly interested in the French assets.
However, after the sale of the assets Risanamento remains at risk of having to renegotiate its debt with banks as two bonds worth around 540 million euros come due by the end of this year.
Writing by Francesca Landini; Editing by Paola Arosio and Pravin Char