10 September 2015 – Expansión
200 MILLION REVENUE / The businessman takes a step back in the real estate sector to cover his part in the one billion Macro enlargement of the construction company, which he wants to launch this same month.
Twenty months after landing on Colonial, the Villar Mir group has decided to step back from the real estate to protect its interests in OHL, for which the group needs funds worth 500 million euros to cover its share in the Macro enlargement of one billion euros, so not to lose majority control in the construction company.
Part of these funds come from Colonial. Yesterday, the family holding company, main shareholder of the group with 24.5%, informed the CNMV of an accelerated placement of 10% of its share, a sale that completed within a few hours for nearly 200 million euros. Colonial closed yesterday on the Stock Exchange with 0.6 euros per share, a rise of 0.6%.
Next to 4.3% of Abertis (controlling another 14% of the motorway company through OHL), Colonial is listed as the most liquid asset of Grupo Villar Mir. Last Monday, Juan Miguel Villar Mir himself hinted he could use some of the assets of the family corporation to support the expansion of the construction company. “We have 7 billion in assets to back up the operation.”
There also was a speculation on the market about the possible sale of Torre Espacio as a source of extra income, but the selling process of the Madrid skyscraper has slowed and probably will be postponed until 2016 because of the tax advantages. According to the consulted financial sources, there are eight indications of interest in the assets that could be valued at about 600 million euros.
The Villar Mir Group could also cash in 4.3% stake in Abertis (worth about 597 million euros) but the company president has ruled it out due to the stability of the market value and its high dividend guaranteed.
To complete the necessary funds for bringing forward the expansion of OHL, Villar Mir may soon sign a loan with a group of banks. As it controls 59.5% of OHL, it can also offer for sale part of its subscription rights, without coming down to 50%.
According to the latest data provided by the business group, Villar Mir has a credit of 300 million tied to its stake in Colonial. In principle, the loan is guaranteed by the real estate’s own shares, so it is likely that Villar Mir will have to ask bank’s permission to divest 10% of Colonial.
Deutsche Bank and Morgan Stanley are responsible for coordinating the sale of 318.8 million shares. The terms of the accelerated sale will be announced today.
OHL is currently the greatest concern of Villar Mir, severely penalized on the stock market for financial difficulties and unleashed speculation after the scandal affecting its concessions subsidiary in Mexico. Yesterday, OHL closed at 12.2 euros per share, an increase of 3.3%. In one year the price of the construction company accumulated a decline of over 50% and the value is conditioned by the size of the expansion itself, which will cause a significant dilution among current shareholders who choose not to support the investment.
Another circumstance against OHL was the poor performance of international building business, which in 2014 forced the group to make provisions of 300 million euros for several failed deals in Canada, Qatar and Algeria. Another risk factor for the group is its funding secured with the titles in listed companies (OHL Mexico and Abertis), which will have to be extended if stocks fall.
Original story: Expansión
Translation: Lee La