UPDATE 2-Swedish landlord SBB jumps 20% on EduCo sale talks

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(Updates throughout with analyst comment, share reaction, context)

By Marie Mannes

STOCKHOLM, June 26 (Reuters) – Shares in Swedish landlord SBB rose by as much as 20% on Monday, buoyed by investor hopes of debt relief after the start of talks to sell education subsidiary EduCo.

Stockholm-based SBB has been fighting for survival since its shares plunged in May on concern over its financial position and the refinancing of billions of crowns in debt.

Its problems, together with wider concerns about the impact of economic weakness and rising interest rates on Swedish commercial property sector, have helped to depress the Swedish crown.

SBB said on Sunday that it had entered discussions to sell the company’s remaining 51% of EduCo, having in recent weeks attracted interest from Brookfield Asset Management.

SBB also said it was in discussions over the repayment of a 14.5 billion Swedish crown ($1.35 billion) inter-company loan advanced to EduCo.

The volatile shares in the company rose as much as 20% on Monday, and were up over 12% at 1009 GMT. SBB shares have fallen almost 95% since their peak in November 2021.

Carlsquare analyst Bertil Nilsson said the most positive aspect of Sunday’s announcement was the possibility of the repayment of the inter-company loan.

The loan is for up to six years at 3% interest and a repayment could free up capital for SBB to repay some of its debt.

The company, which owns rent-regulated properties and community service properties, has previously said it plans to sell assets worth about 6 billion Swedish crowns in the coming year and will consider selling some or the rest of its business.

In addition to liquidity worries, the company also faces criticism over its accounting methods. Sweden’s Financial Supervisory Authority (FSA) is investigating whether the company broke accounting rules in its 2021 annual report. ($1 = 10.7282 Swedish crowns) (Reporting by Marie Mannes in Stockholm, additional reporting by Jagoda Darlak in Gdansk, Editing by David Goodman and Barbara Lewis)

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