3i To Buy Rest Of 3i QPEP; GBP110 Million Inflow To Help Cut Debt

U.K. private-equity company 3i Group PLC (III.LN) Monday said it is buying the rest of 3i Quoted Private Equity PLC (QPE.LN) that it doesn't own and in the process would gain some GBP110 million to help cut its GBP2.2 billion debt.

3i said its planned acquisition of the remaining 55.1% will be done through a solvent liquidation of QPEP, where a liquidator would transfer QPEP's assets to 3i after 3i pays QPEP shareholders with some cash and new 3i shares.

The move comes just days after 3i sold 77 million shares at 79 pence a share in 3i Infrastructure PLC (3IN.LN), a unit that invests in infrastructure assets.

The company has said that it is looking at various options to cut its debt.

Analysts have said the company must sell many more assets in order to meaningfully cut its debt.

Under the new deal, each shareholder in QPEP, a company that invests in smaller public companies, would get 50 pence a share in cash and about 17% of each new 3i share. This values each QPEP share at 88.8 pence.

This is equal to the net asset value of QPEP shares on Jan. 31 and is 32% higher than QPEP's closing price of 67 pence Friday.

3i said it will issue 37.6 million new shares, which represent 8.9% of the 3i's enlarged share capital.

With QPEP holding some cash of around GBP240 million and the cash transaction costing some GBP130 million, 3i is expected to have a net cash inflow of GBP110 million after completing the deal, spokesman Patrick Dunne said.

At 0925 GMT, 3i shares were up 0.8% at 219 pence, while QPEP shares were up 29% at 85 pence. The FTSE 100 index was up 1%.

Company Web site: www.3i.com

-By Vladimir Guevarra, Dow Jones Newswires, Tel. [phone], [e-mail]