Realia Authorises Carso’s Purchase Of Loan From Sareb

17 December 2015 – Consensus del Mercado

Realia’s Board of Directors has agreed to authorise Inversora Carso, S.A. de C.V.’s purchase from Sareb of the shareholders’ loan granted to Realia on 30 September 2009, for an initial amount of €50 million.

This authorisation has been granted under the same terms and conditions as those previously offered by Sareb to Realia, which has rejected the option of repaying the loan early due to its current financial situation.

Original story: Consensus del Mercado

Translation: Carmel Drake

Slim Set To Acquire Realia After Hispania Withdraws Its Bid

24 July 2015 – Expansión

The Mexican businessman, who already owns 25% of the real estate company, has now been given free rein to make an agreement with Realia’s creditors.

The takeover war for Realia came to an end on Wednesday, one day before the deadline for its approval. The Socimi Hispania Real, a subsidiary of the listed company Hispania, announced on Wednesday that it was withdrawing its public bid to acquire Realia’s shares, which it had launched in November 2014.

Hispania’s Board of Directors have decided to withdraw, rather than improve, their bid of €0.49 per share, despite the offer (€0.58 per shares) submitted by their competitor, the Mexican businessman Carlos Slim, through his real estate company Carso.

Hispania’s decision leaves Realia’s shareholders with just one alternative, the one presented by Slim, who already controls 24.9% of the real estate company, after he purchased the stake previously owned by Bankia.

Nevertheless, it seems unlikely that this bid will be successful either. According to sources close to the process, the percentage of shareholders agreeing to Carso’s bid did not exceed 1% of the capital on Wednesday, a situation that would not only not harm Slim’s interests, but that would actually benefit him by preventing the creditors from executing Realia’s debt.

Lower price

The offer presented in March by the Mexican businessman falls well below the listed price of the real estate company. The company’s shares closed trading on Wednesday at €0.705, despite having fallen by 2.08%, to place the market capitalisation of the company at €216.7 million. Slim’s bid price values Realia at €30 million less.

The change in control of Realia would result in the early repayment of the €1,170 million debt held by the real estate company. Almost €800 million of that amount was loaned by the funds Fortress, King Street and Goldman Sachs. Those three creditors had made an agreement with Hispania to not enter into negotiations with any other candidate regarding the purchase of Realia for 10 months. Now that the Socimi has withdrawn its takeover offer, that agreement is void.

That loan is due to be repaid at the end of 2016. If Slim does not acquire more than 30% of Realia, then the change of control clause will not be invoked and no early repayment will be required.

Even if he does not manage to buy more shares, Slim may still be able to control Realia with the support of FCC, in which he is primary shareholder, with a 25.6% stake. The construction company, which owns 36.9% of Realia, has said that it would not sell its stake in the event of a takeover.

In his takeover prospectus, Slim – who is being advised in this process by the law firm Ontier – considered the possibility of negotiating with the creditor funds to capitalise some of the loan, amongst other options – he also considered undertaking a capital increase, whereby allowing new shareholders to enter and diluting his own shareholding.

During the first quarter of 2015, Realia generated turnover of €23.3 million, i.e. 33.9% less than in 2014, whilst its net profit amounted to €170,000, compared with a loss of €7.6 million in the previous year.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Realia’s Board Warns Against Slim’s Offer, But To His Benefit

6 July 2015 – Expansión

Although it may seem contradictory, Realia’s negative assessment of Carlos Slim‘s offer, announced by the real estate company’s Board of Directors yesterday, may be beneficial for the interests of the Mexican investor. If the minority shareholders (who hold a 38% stake) follow the Board’s recommendations, then they will not accept the takeover bid and that will allow Slim to reduce his offer and, at the same time, avoid one of the clauses that would activate the early repayment of some of Realia’s loans, amounting to €790 million.

Through Carso, Slim already holds effective control over the real estate company through his direct stake of 24.9% (he purchased Bankia’s stake for €44.5 million) and his indirect stake of 37% held through FCC (which has announced that it will not participate in the takeover bid), where he is the majority shareholder with a 25.6% stake. As a result, he exerts control over Realia, with a stake of almost 62%.

Carlos Slim launched a voluntary offer for 100% of the real estate company at the same price as he acquired the shares from Bankia (€0.58 per share), which exceeds the offer submitted by Hispania (€0.49). Both rival bids have now entered a competitive process, which the CNMV will settle within a period of 30 days.

Although Realia’s Board described the offer as “unreasonable”, it does appreciate certain features of Slim’s takeover bid. The offer from the Latin American tycoon falls 19% below the real estate company’s market price (€0.69), but it is 18% higher than Hispania’s bid. Moreover, Realia’s Board (the Mexican’s representative, Gerardo Kuri, did not participate in the deliberations) appreciates: the fact that the bid amount would be paid in cash; that the bidder is “a company with extensive experience in the real estate sector; and that the bidder would bring stability to the shareholder structure of the company”, which has promised to restore dividend payments as soon as possible and ensure the continuity of the company on the stock exchange.


Slim has been working on the company financing side of the Realia transaction for a long time. Realia’s main creditors are Fortress, King Street and Goldman Sachs. The funds, which together loaned Realia €790 million of its total debt of €1,000 million, signed an exclusivity agreement with Hispania. They could declare the early repayment of the liability, with just five days notice, if Slim’s shareholding were to exceed 30% and there was a change in Realia’s controlling shareholder.


Slim and Hispania still have time to improve their offers, up to five working days before the end of the period for offers to be accepted, i.e. around 17 July or 20 July. If they do not increase their bids, they must submit an envelope with their best offer to the CNMV. If Hispania’s offer is worse but the difference between its offer and Slim’s is less than 2%, then the Socimi in which George Soros holds a stake will have the option to match the offer made by its competitor.

Meanwhile, if the Mexican investor exceeds the number of shares held by FCC, it will have to launch a mandatory takeover for 100% of the company. And not at €0.58 per share, but at the fair price set by the CNMV.

Realia closed trading on Friday at €0.69 per share, up 0.7%.

Original story: Expansión (by C. Morán)

Translation: Carmel Drake

Sareb May Exchange Its €57.5M Debt In Realia For Shares

20 May 2015 – El Economista

Sareb may have the option to enter the share capital of Realia, with a maximum stake of 4.5%, through the exchange for shares of the equity loans (€57.5 million) that it holds with the real estate company.

Realia will request authorisation at its next shareholders’ meeting to undertake the necessary capital increases in the event that the ‘bad bank’ decides to perform the operation.

It will undertake two capital increases, one amounting to €29 million and a second amounting to €28.9 million. In both cases, it will issue around fourteen million new shares at €2 per share, a price that almost triples (+185%) the current share price of the real estate company.


In this way, Realia will give the ‘bad bank’ another year to exercise its option to become a shareholder of the company. The institution will consider this possibility at a time when Realia is subject to two takeover bids (OPA), one by the Socimi Hispania and the other by the businessman Carlos Slim.

These bidders are waiting for Spain’s National Securities Market Commission (CNMV) to approve the second bid so that the acceptance period may begin.

Sareb’s equity loan in Realia was granted in September 2009, when the real estate company signed a €100 million loan agreement with its two then partners (FCC and Bankia), which each contributed 50% of the balance. FCC then exchanged its entire loan balance for shares in the company, converting it into the majority shareholder, with a stake of 36.8%, which it has already said it will not sell under either of the takeover scenarios.

Meanwhile, Bankia, which currently has an agreement to sell its 24.9% stake in Realia to Carlos Slim, transferred its share of the loan to Sareb in December 2012. The entity has not yet made any decision about the eventual conversion. Nevertheless, the financing is due to expire in 2016.

Of Sareb’s total loan amount, one tranche amounting to €29 million is “freely convertible” in nature, whilst the second tranche, amounting to €28.58 million, is “not freely convertible”, which means that the institution will have to decide between capitalising it or accepting a discount.

Slim’s arrival

Another item on the agenda at Realia’s shareholders’ meeting, which will be held on 22 June, is the ratification of the appointment of Gerardo Kuri as a Director – he is currently the Director General of Real Estate at Carso, one of Slim’s companies, as well as a Director of FCC and the CEO of Cementos Portland.

Slim appointed this spokesman and positioned him on Realia’s board, after he became the primary shareholder of FCC and that group decided to continue as a partner of the real estate company, but just days before the Mexican businessman launched his takeover bid for the company.

Realia will also ask its shareholders for approval, if they deem appropriate, of an increase in its share capital by up to half of its current size and to issue debt securities for a period of up to five years and for a maximum amount of €450 million.

Original story: El Economista

Translation: Carmel Drake

Slim Would Keep Realia On The Stock Exchange And Support A Return To Dividends

18 March 2015 – Expansión

Slim has formally announced his offer to the CNMV / The Mexican investor’s counter-bid amounts to €0.58 per share, i.e. 18% higher than Hispania’s offer. He has now guaranteed control of the real estate company through FCC and the 25% stake he intends to purchase from Bankia.

Yesterday, Carlos Slim confirmed his plan to take control of Realia through his property company Carso, by confirming to the CNMV his counter-bid for the real estate company at €0.58 per share, whereby valuing the company at €186.6 million. The offer by the Mexican business tycoon, who is the majority shareholder in FCC, is 18% higher than the bid authorised by Hispania (€0.49 per share).

The two bids are well below Realia’s value on the stock exchange; its share price closed yesterday at €0.71 (having increased by 3.6%), therefore, unless there are improvements in either of the competing takeover bids, neither will receive backing from the shareholders.

But that factor is not important for Slim, since, in practice, he is already guaranteed control of the company, thanks to an agreement (he has made) to purchase the 24.9% stake held by Bankia in Realia for €44.5 million (€0.58 per share or the best price that arises from the takeover bids). With this percentage, plus the 37% indirect stake he holds through FCC, Slim will own 62% of Realia.

Shareholder agreement

Proof of the robustness of the plan set out by Slim is that his counter-bid is not conditional upon any percentage approval by the shareholders; it only requires that the agreement to purchase Bankia’s shares comes to fruition.

In the note that he sent to the CNMV yesterday, Slim ‘gave a strong signal’ to the shareholders of Realia that they should continue in the company and, therefore, not accept his offer. Carso’s objective, as well as to ensure that Realia continues trading on the stock market, is to “clean up Realia, increase its revenues and reduce its expenses, in order to undertake an active dividend distribution policy over the long term, to the extent that Realia’s financial circumstances allow it”. Through these dividends, Slim is seeking to increase Realia’s appeal to its minority shareholders, which have not received any (dividend) returns on their shares since 2008.

The only weakness in the Mexican investor’s offer is the possible reaction of the opportunistic funds that bought the majority of Realia’s debt. Specifically, Hispania signed an exclusivity agreement with Fortress, King Street and Goldman Sachs before it launched its takeover bid, whereby it committed to purchasing half of their liabilities at a discount of 21%.

The three funds hold €793 million of Realia’s total debt balance of €1,097 million. These loans, which were sold (to the funds) by Sareb, Santander and CaixaBank last year, are due to mature soon: on 30 June 2016. When the funds agreed to purchase the debt, they agreed with Realia that, in the event of a change of ownership of more than 30%, the whole amount (of the debt purchased) would have to be repaid “immediately” with one exception: the successful takeover of the company by Hispania.

The exclusivity agreement between the Socimi owned by George Soros and Realia’s funds expires after seven months, which means that Slim and these credtiors will not be able to reach any agreement until 21 September.

Despite this hurdle, sources close to the Mexican investor indicate that it will not prevent him from taking control of Realia. Firstly because there are serious doubts that more than 30% of the shareholders will agree to Slim’s takeover bid, which falls 18% below Realia’s listed share price. In addition, the same sources point out that Realia holds €450 million in cash, which it could use to repay some of its liabilities. The remaining debt could be exchanged for real estate assets owned by Realia.

Hispania has also lowered its expectations in terms of Realia. It would settle for a “financial stake” of less than 30%. Nor should an agreement between Slim and Hispania be ruled out.

Original story: Expansión (by C. Morán)

Translation: Carmel Drake