A Swap from ING & CaixaBank: the Last Stumbling Block in the Sale of Santander’s HQ to AGC

27 July 2018 – Voz Pópuli

The sale of the company that owns Santander’s Ciudad Financiera is closer than ever to becoming a reality. The approval of the liquidation plan by a Madrilenian court set September as the deadline for offers. Nevertheless, there are still disputes to be resolved.

The main stumbling block now is a lawsuit in London against a swap (financial derivative) granted by five entities: Royal Bank of Scotland (RBS), CaixaBank, ING, HSH Nordbank and AG Bayerische Landesbank. The lawsuit, filed years ago, is based on a claim that RBS manipulated the interbank – LIBOR and Euribor – market. The lawsuit amounts to €800 million, given that the swap has cost around €90 million per year since 2008, according to financial sources consulted by this newspaper.

The discussion in Spain focuses on the fact that some of the creditors of Santander’s headquarters fear that the new owner of the company (Marme Inversiones 2007) will decide to shelve that lawsuit. It would require an agreement between the new Marme and the five banks party to the swap in exchange for renegotiating the derivative, which expires in 2023.

AGC’s offer

Those €800 million, if the process in London proves successful, could mean that all of the creditors recover their money. In particular, the original shareholder, the Brit Glen Maud, and the company Edgeworth Capital, owned by the Iranian investor Robert Tchenguiz, who took positions during the bankruptcy.

Other sources consulted indicate that there is a commitment from the main interested party in the Ciudad Financiera, the Arab fund AGC Equity Partners, to keep the Marme litigation case open.

Currently, the only offer on the table is the one presented by AGC in 2016 for between €2.5 billion and €2.8 billion, depending on the variables that are included. A year earlier, Aabar Investments, the owner of Cepsa, and Edgeworth, also submitted bids. But they were not accepted.

As we wait to see what will happen over the next two months, AGC leads the rest of the candidates to acquire Santander’s headquarters.

One of the possible counter-offers could come from Edgeworth, which negotiated a €2 billion loan with JPMorgan to participate in the liquidation plan. It also proposed that the company exit from bankruptcy without the need to be liquidated.

This operation would generate a sale with significant gains for the funds that entered the process by buying Marme’s debt from financial institutions. They include Blackstone, Canyon and Monarch.

Original story: Voz Pópuli (by Jorge Zuloaga)

Translation: Carmel Drake

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