15 September 2017 – Voz Pópuli
The soap opera involving the sale of Santander’s Ciudad Financiera is closer than ever to being resolved. The Arab fund AGC Equity Partners, Santander and the majority of the creditors have reached an understanding to unblock the process, which has been stalled for three years, after the company that administers Santander’s global headquarters, Marme Inversiones 2007, filed for bankruptcy.
The key has been the size of the new offer presented in recent months by AGC, amounting to around €2,800 million, according to financial sources consulted by Vozpópuli. With this proposal, all of the creditors would receive the amounts due to them and there would even be some funds left over to share out amongst Marme’s original shareholders: the property magnate Glenn Maud and the fund Aabar Investments, controlled by IPIC, which owns Cepsa.
AGC has already informed the judge handling the bankruptcy – at Mercantile Court number 9 in Madrid – that the situation is now ready to be unblocked. But the magistrate has left everything hinging on the Provincial Court, which still has to resolve several prior appeals. Various sources consulted indicate that these resolutions could be resolved by the end of this year or the beginning of 2018. Then the formal auction of the company that owns the Ciudad Financiera could be launched, with AGC as the main favourite, assuming no last minute surprises.
One of the keys behind sorting out the sale of the Ciudad Financiera is that Santander has withdrawn an appeal that threatened to perpetuate the bankruptcy process. In this way, the bank chaired by Ana Botín, advised by Clifford Chance, decided to submit a letter alleging that the Marme liquidation plan was not taking into accounts its right to sound out the market (for potential buyers).
In addition, Santander engaged Goldman Sachs to look for offers that would better fit with their interests. Paradoxically, the firm that is now best positioned to win – AGC – is the same one that blocked the bank’s appeal. According to legal sources, Santander pays an annual rent of around €110 million for the property and the rental contract runs until 2048, neither of which would vary under the new owner. But there are other clauses in the agreement that would be changed in favour of Santander.
The final stumbling block is the position of two of the players that invested in Marme Inversiones after it filed for bankruptcy: Aabar Investment, which purchased the shares of one of the original shareholders, the British businessman Derek Quinlan, and which would like to buy the Ciudad Financiera itself; and the Luxembourg company Edgeworth Capital, led by the controversial Iranian banker Robert Tchenguiz.
Sources close to the process think that it will be hard for their appeals to gain traction in the face of AGC’s willingness to repay all the creditors; something that no other investor has offered until now. The other recent offers amounted to between €2,400 million and €2,500 million.
Origin of the problem
Marme Inversiones 2007 filed for bankruptcy in 2014 after it was unable to pay its debts. The company was created in 2008 with very heavy financial burdens, at the worst time, shortly after the bankruptcy of Lehman Brothers. Marme paid €1,900 million for Santander’s headquarters in Boadilla del Monte.
Now the situation is just the opposite. The good times in the market mean that obtaining financing is cheaper than it has been for the last decade, something that AGC wants to take full advantage of to seal this complex operation.
Original story: Voz Pópuli (by Jorge Zuloaga)
Translation: Carmel Drake