02/01/2015 – ABC
The San José Real estate group has been saved by the bell
Saved by the bell. The San Jose Group has found a white knight to save it from the dire straits of bankruptcy, as the ABC reported yesterday. Banco Popular and its partner, the Värde Partners fund, will take control over the realtor of the new holding company, after managing to swap its debt for equity stocks of the division which was completely unprofitable.
As the newspaper was informed, according to the announcement to be made today by the company, headed by Jacinto Rey, to the National Securities Market Commission (CNMV), the conditions of the previous syndicated loan are breached and they must start all over again from scratch, leading to a new company with new owners in its real estate division.
Thus, the new agreement reached between the directors of Grupo San José and the creditor banks is divided into three parts: Firstly, the creation of a new holding company — Grupo Empresarial San José, under the leadership of the current president Jacinto Rey, which will assume a debt of 100 million euros; secondly, this holding will also own the construction company, with a debt amounting to 250 million; and thirdly, the so-called “unsustainable” debt (in financial terms) — over 1.2 billion — will remain in the real estate company. This debt originates from San José’s takeover bid from 2007 for the Valladolid-based realtor Parquesol, which is what Banco Popular, the Värde Partners and Marathon Asset Management funds will capitalize on.
The real estate division will thus become property of the creditor banks. 80% of it will be controlled by Popular, Värde and the Marathon fund. Banco Popular and Värde are going to integrate it into their real estate joint venture, where the former holds 49%, and the latter, 51%. The remaining 20% will be split among the rest of the creditors – JP Morgan, Deutsche Bank and SAREB.
The agreement reached with its main creditors–Banco Popular and Värde–will boost the financial viability of the new business group, which will resume its traditional activities as a construction company but with a very limited amount of debt in order to continue with its expansion plan, especially towards Latin America.
Up until yesterday, San Jose had debt of over 1.6 billion. Its major creditor from the beginning was Banco Popular, with a debt amounting to 476 million (a figure that includes the part coming from Banco Pastor, which was acquired by Popular). Currently, Värde Partners, a partner headed by Angel Ron (its real estate and cards division) has become its largest creditor over recent months, holding claims to 52% of the total liabilities from the banking syndicate, i.e. 868 million.
The fund has been steadily doing away with most of the debt piled up by the company from the financial institutions that have been trying to get rid of it — Santander, BBVA, Sabadell, Barclays and Abanca. Bank of America has been the intermediary. Yesterday, Grupo San José rose 11.59% on the stock exchange, as the new agreement was coming.
Original article: ABC
Translation: Aura REE