Blackstone Accuses FCC Of €200 Mn Debt Forgiveness Coercion

7/01/2015 – El Confidencial

Recently, contractor FCC has successfully increased its capital by 1 billion euros. However, celebration didn’t last long as several creditors of the firm filed a collective lawsuit against ‘forced’ loan forgiveness. Among the plaintiffs one may find GSO, an affiliate of Blackstone.

According to financial sources, the group of lenders behind the legal action is going to provide necessary documents proving that FCC made them forgive a 200 million debt corresponding to 1.35 billion B-tranche of the holding’s corporate debt. Approval has been given by 85% of the creditors with the remaining 15% condoned.

Precisely, 75% of the debt was owed to six leading Spanish banks – Santander, BBVA, CaixaBank, Bankia, Sabadell and Popular – called G6 and which said ‘yes’ to the forgiveness. FCC took for granted that the rest of the lenders agreed as well. But several funds, waiting for repayment of more than 500 million euros in total, have rejected the proposal and went to the court.

This is the first lawsuit against a Spanish company caused by a dissent in a debt restructuring process.

The vulture fund of Blackstone, GSO, lent 350 million euros to FCC’s Giant in 2012. Moreover, the arm holds a claim to a part of 1 billion euros in loans of Cementos Portland.

The funds hired law office Boies, Schiller & Flexner. They say the ‘sacrifice is disproportioned’ as forced forgiveness does not apply to capital increase but to liquidation.

The situation is so complex that Carlos Slim, the new majority stakeholder in FCC, has suggested the opposing lenders should consider signing the relief agreement if they want to participate in operations planned by the magnate. Blackstone replied the act would not only be harmful for the creditors but also for the reputation of FCC on the market.


Original story: El Confidencial (by Agustín Marco)

Translation: AURA REE