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Metrovacesa To Capitalise €730M To Reduce Its Debt

6 April 2015 – Expansión

Metrovacesa is continuing its debt reduction process. After generating income of €1,546 million from (the sale of) its 27% stake in Gecina last summer, the real estate company will propose a capital increase of almost €730 million at its next shareholders’ meeting.

The aim of the capital increase is to convert some of the group’s liabilities into shares, according to an announcement made by the real estate company regarding the agenda for its general shareholders’ meeting. At the meeting, which will take place on 28 April at its headquarters in Las Tablas (Madrid), the leaders of the real estate company will present the results for 2014. In 2013, the most recent year for which figures have been presented, Metrovacesa recorded losses of €349 million, i.e. 29% more than in the previous year.

In that year, the group’s financial debt exceeded €5,088 million, a liability that it has managed to reduce following the sale of its stake in the French real estate company Gecina. In June, Metrovacesa agreed the sale of its 26.7% stake in the French company to Norges Bank, Crédit Agricole, Blackstone and Ivanhoe Cambridge for €1,546 million. These funds were mainly used to repay a syndicated loan amounting to €1,600 million.

The debt for equity exchange will be accompanied by a capital increase through a cash contribution, with preferential subscription rights. The objective is to allow the 4,000 smaller shareholders to maintain their minority stakes, if they so wish, without any dilution of their ownership.

The main shareholder of Metrovacesa is the Santander group. The financial entity holds 55.8% of the (real estate company’s) capital, after it acquired the 19% stake that Bankia held in December (2014). Santander paid €100 million in that transaction.

The bank, chaired by Ana Botín, first invested in Metrovacesa’s share capital in 2008, when the real estate company was unable to pay its debts to its then largest shareholder, Román Sanahuja. Other banks also participated in that transaction (and still hold stakes today), namely: BBVA, which holds a 18.31% stake; Sabadell, which holds a 13.04% stake; and Popular, which owns 12.64%.

In 2013, these entities approved the de-listing of the real estate company from the stock exchange and, since then, they have focused on restructuring the debt.

New directors

At the shareholders’ meeting, Metrovacesa will also propose the appointment of four new directors: Rodrigo Echenique, Vice-President and Executive Director of Santander; Abel Matutes, Chairman of the Matutues business group; Juan Ignacio Ruiz de Alda, Director at Santander; and Manuel Castro; Director of Global Risk Management at BBVA.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake