31 August 2015 – Expansión
THE COMPANY EXPECTS TO GAIN 20.2 MILLION IN 2015 / The bank increases its commitment to a property company, that is being reborn from the ashes, with the purchase of 13.8% stake from Sabadell for about 130 million.
Santander believes Metrovacesa can recover to being one of the leaders in the Spanish real estate. For this reason,it just increased its commitment to the company, with the purchase of 13.8% of its holding by Sabadell, “for an amount of one euro per share,” according to sources familiar with the operation, which amounts close to 130 million, an operation advertised by EXPANSIÓN on July 23.
With this new acquisition, the bank headed by Ana Botin will have 72.5% of the capital. In fact, the shareholding will be shared only with BBVA, which has 19.4%, and Popular, which holds 7.9%. The agreement between Santander and Sabadell comes just six months after a similar operation between Santander and Bankia, when the 19.07% stake in Metrovacesa was bought. Bankia, which had to free itself from all its holdings received 100 million euros for its share.
Santander trusts, therefore, in the revival of the Spanish real estate company, currently chaired by Rodrigo Echenique, vice president of the bank since 6 May. According to the strategic plan of Metrovacesa for the period of 2015-2020, to which EXPANSIÓN has had access, the company expects to earn 20.2 million euros this year, mainly due to the sale of assets. This would mean the end of a negative streak since 2008, when its losses began.
In fact, last year, it earned revenues of 134.9 million euros compared to 104 million in the previous year. In this period, the company recorded a loss of 185 million compared to 349 million in 2013. “The company has potential in the medium term. That’s why Santander bet on it before, certainly, reselling it. With a package already above 70%, it could attract other real estate operators, such as mutual funds, “noted financial sources.
However, the same sources indicate that to accomplish this business plan, “it is likely that new cash injections will be needed.” For now, the company has already begun to work on new projects such as development of housing, hotels and shops, in the old Clesa factory in Madrid.
To December 31, Metrovacesa had some assets valued at 4,8 billion euros, which included almost 1 billion in land and residential product. This part of the assets may exit the company’s portfolio.
On the other hand, the company faces a major debt restructuring, amounting to 2,4 billion euros. For this it has hired Goldman Sachs. In fact, the debt that was included in the Sabadell’s sales package, of about 300 million euros, was also counted in this process.
The efforts to reduce the liability and make the company viable have been constant. In May 2013, when Metrovacesa was delisted from Exchange, it’s worth amounted to 5 billion. But it has already carried out three processes of restructuring. After refinancing in early 2014, Metrovacesa divided its syndicated loan into two sections. The first one, called Tramo (Segment) A, was reduced by 80%, to 213.9 million euros, with revenues generated from the sale of Gecina (obtaining 1.546 million for its 26.67% in this French real estate company).
In the case of Tramo B, Metrovacesa repaid in advance 651 million, a deal that included a debt reduction of 156 million euros, as recorded in the latest company report. This transaction, closed on January 20, was completed in April when three of the four shareholding banks, BBVA, Santander and Sabadell, canceled this credit after conducting a capital increase of 751 million euros.
Original story: Expansión
Translation: Lee La