6 March 2015 – Expansión
ALLIANCE / The businessman is building bridges with the Socimi, which has an agreement in place with the group’s creditors to restructure its debt. Slim may transfer some assets or engage the management of the real estate company to his rival.
The takeover war being fought between Hispania Real and Carlos Slim’s real estate company Carso, for the control of Realia may end with the waving of a white flag. On Wednesday, the Mexican businessman announced his acquisition of a 24.953% stake in Realia’s share capital from Bankia and “in addition” that he would be launching a takeover bid for 100% of the company’s shares at a price of €0.58/share.
The businessman’s offer exceeded the one made by the Socimi in November for €0.49 per share, by 18%. That takeover bid is still pending approval by the CNMV.
In his favour, Slim’s offer does not only win on price. The Mexican businessman is also the largest shareholder in FCC, which in turn owns a 36.9% stake in Realia. After Slim joined the construction group, FCC announced in February that it would be suspending the sale of its stake.
Nevertheless, Hispania still has an ace up its sleeve. The Socimi created by Azora’s managers, Fernando Gumuzio and Concha Osácar made an agreement with Fortress, King Street and Goldman Sachs before launching the takeover bid. The three funds have lent €793 million of the total debt (€1,097 million) held by Realia. Those loans, sold by Sareb, Santander and CaixaBank last year, are due to mature soon: on 30 June 2016. Moreover, when the funds agreed to purchase the debt, they also agreed with Realia that, in the event of a change in more than 30% of the shareholders, then the whole debt amount would have to be repaid “immediately”.
On 21 November, Hispania made an agreement with the creditors in which the funds agreed not to exercise their shares and not to demand the full repayment of the financing that would result from the application of the change of control clause. In exchange, Hispania purchased 50% of the receivables that each one of the funds possessed, at a discount of 21%. This partnership makes Slim’s assault on the real estate company more difficult, and so the Mexican has not wasted any time building bridges with his competitor.
The main obstacle facing Slim is that Hispania and the funds agreed an exclusivity period of seven months for the execution of the agreements, extendable up to ten months if a competing offer were presented. “During that exclusivity period, neither of the parties may initiate, encourage, lead, trigger, conduct or respond to any offer, proposal, contact, conversation, negotiation or approximation of any kind, with or from any third party, regarding the implementation of any operation that may be similar or incompatible with the execution of transfer of the loans resulting from the financing to Hispania Real”, says the agreement. This means that Slim and the funds may not make any agreement until 21 September without taking Hispania into account.
Against this background, the Mexican businessman has chosen to forge an alliance with his rival, to reduce this period. In exchange, according to close sources, Slim is offering the Socimi some capital, some assets to increase its own equity or the opportunity to participate in Realia as its manager. Inmobiliaria Carso, the vehicle that Slim wants to use to acquire Realia, does not have either the structure or the knowledge of the Spanish market held by Hispania’s managers, and therefore a deal between the two cannot be ruled out.
The prior agreement with Hispania places the creditor funds in an advantageous situation in the context of the new offer. In the event that the Socimi does decide to raise the price of its takeover bid, Fortress, King Street and Goldman Sachs would receive €38.25 million more for 50% of their debt. If, on the other hand, the Socimi decides to withdraw from the process, the funds shall pay Hispania €5 million “provided that the rights of creditors’ loans have satisfied the nominal”.
Original story: Expansión (by R. Ruiz, D. Badía and C. Morán)
Translation: Carmel Drake