Banking Lenders to Receive Stake in Martinsa

24/03/2014 – Expansion

Martinsa-Fadesa´s lending institutions started to explore the possibility of applying the new insolvency law approved by the Government a week ago to the critical situation of the real estate firm. (…) Total indebtedness of Martinsa is equal to €6.570 million.

Alternatives

The company was declared bankrupt in 2008 and obtained a green light for prolonging the debt payment up to 10 years. However, in December 2013, when it came to pay 1% of the €5.5 billion financial debt, Martinsa notified inability to pay the amount. This raised the alarm among the lenders.

(…) If it was not able to pay the 1% last year, the 12% foreseen for 2014 seems unbeatable. Unfortunately, next lack of payment will provoke Martinsa´s liquidation. (…) Together with the declaration, red numbers of the company´s accounts saw the light of day. There were two ways out: swapping a part of subordinated debt or prolonging the exception accountancy agreement with other real estate firms storing its property.

The first solution has been rejected by Bankia, Martinsa´s main creditor (€135 million). (…). The company offered swapping its plots if this would involve significant debt forgiveness.

As land prices in Spain are witnessing their record low levels, neither the banks nor Sareb consider it the most adequate solution. Therefore, they opt for the new insolvency law that permits converting debt into assets. As a result, the company´s stakeholding will be totally re-organized and a new managing board named.

Shareholders

At present, Martinsa´s chairman, Fernando Martín, holds a 44.46% stake, while its vice-director, Antonio Martín Criado, possesses 15.11%. Application of the refinancing measures stated in the Royal Decree would mean “an amendment in the capital holding involving a decrease from 100% of bankrupt firm to a viable 10%”- say sources from the sector.

Martinsa Fadesa is currently in a very serious trouble. Last year, it gained €109,9 million that did not allow it to pay own expenses. Fees and costs preceeding from the insolvent debt pushed it towards €568 million losses last year. Negative net real estate asset value exceeds €4.204 million, whilst the company´s property portfolio is estimated to be worth of €2.923 million.

 

 

Original article: Expansión (S. Arancibia/R. Ruiz)

Translation: AURA REE

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