Metrovacesa Creates RE Developer With Assets Worth €1,040M

27 November 2015 – Expansión

The real estate company Metrovacesa, controlled by Santander (owner of 72.5% of the share capital), BBVA (19.4%) and Popular (7.9%) is going to be divided into two companies.

The historical real estate company has announced a demerger project, which was approved by the Board of Directors on 24 November and which will be presented to the ordinary shareholders’ meeting for approval on 29 December.

The project includes the creation of a new company into which Metrovacesa will place its land and home development businesses; meanwhile, the existing company will continue to hold the properties linked to its real estate business, in other words, the offices, shopping centres and homes that generate rental income. “We are looking to carry out a business restructuring process to add value to the company, as well as a potential refinancing of our financial liabilities, to ensure the feasibility and profitability of the businesses in the future, by separating out the property business from the land and home development businesses”, explains the company.

The new company, called ‘Metrovacesa Suelo y Promoción’, will be 100% owned by the current shareholders of the real estate company, in “exactly the same proportion as their existing stakes in Metrovacesa”. The company led by Rodrigo Echenique will create a new company with assets worth more than €1,040 million. “The new company will issue 3,075 million new shares, with a nominal value of €0.16 – a total share capital of €492 million – with a premium of €547.8 million, taking the total value to €1,039.85 million”.

Three capital increases

To create the new company, the Board will propose three successive capital increases to its shareholders. The first one will be non-cash and will involve “specific major shareholders”, which will contribute “assets that will form part of the company’s equity”. The second will involve the capitalisation of financial loans, leaving the new company with hardly any debt; and the third will take place to ensure that there is no dilution of the minority shareholders’ stakes. “In the event that the capital increases are fully subscribed, Metrovacesa’s share capital would amount to €1,261 million”.

Following the demerger, the real estate company will have share capital amounting to €769 million, in other words, around 61% of its current value, and the remaining 39% will be transferred to the new company. The real estate company indicates that its indebtedness is associated “primarily” with its property business and a “significant” portion of it is due to mature in Q3 2016, which it will be able to refinance more effectively following the execution of this process.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

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