The restructuring process of the debt of 5070 million Euros of El Corte Inglés is on the right path. The group has already received the valuation of its real estate assets which was ordered from the valuation firm Tinsa, a condition agreed with its banks in order to renovate the credit.
Therefore, according to Tinsa´s estimations, the value of the real estate assets of the group exceeds 18.000 million Euros, that is, it is more than three times the debt it has with 25 creditors.
The report has taken into account the millions of square meters that make up the real estate patrimony of El Corte Inglés that, according to the last official figures dated 29th February 2012, include 86 department stores (two of them in Portugal), 42 hypermarkets, more than 250 convenience stores under the brands Supercor and Opencor, as well as the logistic platforms and warehouses, and its historic headquarters at Hermosilla Street in Madrid and its latest investment: Torre Titania, in Madrid.
A real estate patrimony created during more than five decades and whose portfolio increased substantially in 1995 with the acquisition of Galerias Preciados, which meant the purchase of thirty buildings at one time and the entrance in thirteen cities.
Years later, in 2001, El Corte Inglés closed the purchase of nine more stores, which had been managed by the British firm Marks & Spencer, among them one on Serrano Street, within the Salamance quarter in Madrid.
Tinsa´s valuation is fairly higher than the only one existing until now, which is the one included in the accounting books, that reached 7578,78 million Euros. When the financial restructuring was announced, El Corte Inglés pointed out that its real estate patrimony was like a “portfolio of assets, located at unique locations, which had a fairly higher market value than the amount of the refinancing”.
Tinsa´s report confirms this declaration. “One of the main features of this portfolio is that these buildings are symbols in their environment and commerce icons in those cities where they are located, mainly due to their location”.
Tinsa´s valuation has not been finished yet. The firm has just finished the total valuation of 80% of the property, whose value reaches 16.000 million Euros. With the rest of the valuation pending, it is estimated that it should add 2000 additional million Euros, which would give out a total sum of 18.000 million Euros.
Once the total valuation has been completed, EL Corte Inglés will share the information with its 25 creditors in order the close the refinancing process of its debt, which reaches 5070 million Euros. The main creditor is Banco Santander, with 1275 million Euros or 25% of the total, although it would have paid off 100 million Euros. CaixaBank follows, with a debt of 754 milion Euros; BBVA, with 705 million Euros and Banco Popular with around 444 million Euros.
The negotiations seem to be on the right path, and according to sources close to the process, the financial institutions see El Corte Inglés as a “perfectly sustainable company” that is carrying out a very important restructuring process as well as the updating of its structure, in order to have a “more solid and well kept” balance. The group presided over by Isidoro Alvarez intends to unify all credits it has with the 25 creditors into one only syndicated loan.
The restructuring process continues its normal procedure and it is expected that a first agreement will be signed in the next few weeks.
With these measures, the company will improve its financing structure regarding costs, deadlines and diversification of financing sources which will allow it to continue its development nationally and internationally.
The financing debt of the group on the short term reaches 2268 million Euros, according to the last accounts, 499 million of which expire this year and 1175 million Euros, in 2014.
El Corte Inglés has also sold non strategic shares which have also contributed with some profit: 1,8% of the air transport group IAG (where Iberia, British Airways and Vueling are integrated) for around 100 million Euros and the 9,9% it had in Inversis for around 20 million Euros. Another great disinvestment has been the sale of its department store in Plaza de Cataluna, in Barcelona, for 100 million Euros.