Reyal Urbis Faces Key Week In Its Effort To Avoid Liquidation

29 May 2017 – Expansión

Reyal Urbis is facing a key week for determining whether or not it will receive sufficient backing from its banks and creditors to allow it to emerge from the bankruptcy in which the real estate company has been immersed since 2013 and whereby avoid liquidation.

The deadline for the creditors of the company, which is controlled and chaired by Rafael Santamaría, to communicate whether or not they accept the debt payment plan proposed by the firm, is this Wednesday 31 May.

The Tax Authority is one of Reyal Urbis’ largest creditors, given that the company owes around €400 million to the public purse, as well as to Sareb and the main financial institutions.

In the event that the real estate company does not obtain sufficient backing from its creditors, it would be forced to file for liquidation. That would constitute the second disappearance of a large real estate company after Martinsa Fadesa’s demise.

Reyal Urbis owes debt amounting to €3,572 million to the banks alone, and at the end of the first quarter of this year, it reported negative equity of €3,436 million.

The plan through which the company hopes to ensure its viability involves agreeing a unilateral payment plan with the Tax Authorities, different from the one offered to the other creditors.

The real estate company is proposing paying off the debt it owes to the financial institutions using real estate assets, an offer that, given the depreciations in values, would represent a discount (on the debt).

Overcoming paralysis

By emerging from bankruptcy, Reyal is also looking to overcome the paralysation that it has been immersed in for the last four years, during which time it has not constructed a single home and has barely managed to sell any assets or manage the hotels for rent in its real estate portfolio, covering 123,000 m2.

In this way, at the end of 2016, the company reported losses of €155 million, similar to the previous year.

In addition, Reyal Urbis’ bankruptcy procedure has been delayed, given that, at the end of 2015, Commercial Court number 6 in Madrid rejected the proposed agreement that had been presented by the company at the beginning of that year. After appealing to the Provincial Court, the real estate company managed to get the proposal agreed and processed more than a year later, at the beginning of 2017.

Original story: Expansión

Translation: Carmel Drake

FCC Wins Legal Ruling Against Blackstone & Goldman Sachs

1 December 2016 – Expansión

A judge from the Commercial Court in Barcelona has dismissed the lawsuit filed by GSO, one of the funds owned by Blackstone, and by Goldman Sachs against the legal agreement approved for the refinancing of FCC‘s debt. As a result of the agreement, the construction company had managed to refinance a tranche of its debt (€1,350 million) at a significant discount (but GSO and Goldmans opposed the deal).

Although the refinancing was backed by 93% of FCC’s creditors, Blackstone and Goldman Sachs opposed the operation and appealed to the courts for damages caused amounting to around €295 million. The judge has now rejected their claim, which cannot be appealed to a higher court.

In January 2015, the Commercial Court of Barcelona validated the judicial approval, which allowed the Spanish construction company to apply a discount and reduce the cost of a tranche of its corporate debt amounting to €1,350 million.

The law firm Linklaters advised FCC in the financial restructuring process and has defended the interests of the construction group against the lawsuit filed by the funds. Uría also acted on behalf of the banks (Bankia, BBVA and CaixaBank), who participated in the lawsuit as a party affected by the appeal, whilst a lawyer from Jones Day defended the interests of GSO and Goldman Sachs.

93% of the banking syndicate accepted the new financing conditions, which basically involved accepting a discount of 15% through the repayment of debt amounting to €900 million using €765 million raised during the company’s most recent capital increase. The outstanding loan balance, around €450 million, is being repaid at (an interest rate of) 5%.

The opposing creditors included overseas investment funds such as Blackstone (GSO) and credit institutions such as Burlington and Ice Focus. The foreign banks included Goldmans, Barclays, Credit Suisse and Merrill Lynch, amongst others. GSO and Goldmans ended up taking the case to court, but the judge has ruled against them.

The claimants tried to link the lawsuit in Barcelona with an appeal in London where another group of FCC creditors has filed a case for the early repayment of their investment through the issue of convertible bonds amounting to €450 million because they considered that the Spanish company had breached one of the suspensive clauses of the contract relating to the non-payment of debt (default). Blackstone (through GSO Capital) was one of the London-based claimants. Given the legal protected afforded to bondholders in London, FCC was obliged to suspend the process to convert bonds amounting to €32.75 million.

In the ruling in Spain, the judge in Barcelona rejected the existence of a link between the resolution regarding the early execution of the bonds and the validity of the restructuring of FCC’s debt.

Original story: Expansión (by C. Morán and G. Trindade)

Translation: Carmel Drake

Alicante’s Shopping Centres: Musical Chairs

24 October 2016 – Valencia Plaza

The shopping centre map in Alicante and its metropolitan area is entering a new phase of transformation during which we can expect to see sales, changes in management, extensions and even the entry of new players into the market, in addition to the likely arrival of Ikea in the city.

And the first change may come before the end of 2016. It involves the sale of the complex led by Poniente’s platform, Panoramis, owned until now by the company Marina de Poniente, which is controlled by the constructor Enrique Ortiz following the departure of Vectalia in 2014. Eighteen years after the centre opened, the company has been forced to get down on its knees and file for liquidation, after failing to comply with the creditors’ agreement that it reached in 2012.

In July, Commercial Court number 1 authorised that an auction may be held for the business unit (in short, the concession to operate the property, owned by the Port Authority) with the aim of generating revenues to cover the debt. So far, up to four solvent investors have expressed their interest in submitting offers to take over the management and operation of the centre for 12 years with the option of extending that period for another 12 years. (…). The centre has 54 units and a multiplex cinema. (…).

In parallel, talks are underway regarding the ownership of the Puerta de Alicante shopping centre in the neighbourhood of La Florida. According to sources in the sector, the French group Klépierre – which has owned 83% of the shares since 2002 – has been sounding out its possible sale since the spring. (…). The complex has a surface area of more than 34,000 m2 spread over 74 retail premises and a cinema multiplex. According to information available on the website, only 28 of its units are currently occupied. The centre contains a Carrefour hypermarket and the French retailer controls the remaining 17% of the centre’s shares.

The third change is expected in the Gran Vía shopping centre, the first retail offering of its kind to open in the provincial capital (in 1998). Its owner, a fund linked to Deutsche Bank – RREEF Investment GMBH – is considering either a change in terms of its operation or the inclusion of new shareholders into its capital. (…). The complex contains 65 retail and restaurant spaces spread over three floors. The low turnout of spectators forced the centre to shut down its cinema screens, but the centre was recently remodelled and the firm Primark has now moved in, which is boosting activity once again.

In other developments, The Outlet Stores de San Vicente centre, the only outlet that specialises in out-of-season products in the whole province, is also undergoing changes. The fund Zaphir Asset Management took over its reins in 2013 after purchasing the asset from the German bank Eurohypo for €9 million. (…). The centre has a retail surface area of 36,500 m2 and contains 75 fashion, leisure and restaurant units, as well as a cinema complex. Its owner is now considering a future expansion, which could involve the construction of another 70 units during 2017. (…).

And finally, permission has been granted to facilitate the opening of an Ikea store in Rabasa (accompanied by land for between two and four retail outlets), the subsidiary of the Fuertes Group, Profusa, has set out plans to construct a shopping centre measuring around 40,000 sqm in the El Mesell area, in the municipality of El Campello (…), however, final approval is still pending.

Original story: Valencia Plaza

Translation: Carmel Drake

Setback For Sareb: Suspension Of “In Tempo” Foreclosure

24 October 2016 – El Mundo

The soap opera involving In Tempo, the tallest residential building in Spain, continues. And the latest episode represents a real setback for Sareb, the main creditor of Olga Urbana, the company that went bankrupt after constructing the famous skyscraper in Benidorm.

Commercial Court number 1 in Alicante, which is handling Olga Urbana’s bankruptcy, has suspended the foreclosure of the property, which, in theory, was going to be awarded to Sareb, after it submitted the only and highest bid, amounting to €58.5 million. The judge has ruled in favour of the appeals submitted by Olga Urbana’s smaller creditors against the aspirations of the bad bank, which had been hoping to take over the building after it spent the summer contending that it had submitted the only official bid.

Nevertheless, according to the ruling dated 13 October, the magistrate considers that In Tempo cannot be awarded until the bankruptcy incidents that are affecting the process have been resolved. As soon as firm rulings have been issued regarding these incidents, the foreclosure will be approved, but not before. This represents a serious setback for Sareb: it had planned to foreclose the 190m tall building and then resell it,  whereby recovering some or all of its debt, which amounts to €108 million in total.

The bad bank will now have to wait until the bankruptcy incidents have been legally resolved. The claims have been filed by Olga Urbana’s small creditors, who consider that the liquidation plan would be harmful for them, given that, in their opinion, they would not recover any of their debt; these companies maintain that Sareb should not hold preferential creditor status, which gives it the right to recover its debt first.

According to these creditors (which include the construction company Kono, the arquitect Robert Pérez Guerras and the former administrator of Olga Urbana, Isidre Boronat), Sareb was an administrator of Olga Urbana and therefore, is responsible for the creditor bankruptcy of the company, which went bust at the end of 2014 with liabilities amounting to €137 million.

The creditors argue that the bad bank should be the last party to recover its money (…). In this way, the small creditors would recover their money before Sareb.

Given that this question has not been decided yet, the judge handling the bankruptcy has opted to wait for clarification as to whether Sareb is a preferential creditor or not, because a premature foreclosure could affect the interests of the other creditors. Meanwhile, Sareb maintains that the foreclosure of the building, which has been valued at €90 million, forms part of the liquidation plan, and would not be harmful to the other creditors.

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

Family War Between The Owners Of La Finca

24 August 2016 – Expansión

An open war is raging between members of the García-Cereceda family, owner of Procisa, the property developer of, amongst other assets, the exclusive La Finca business park in Madrid.

The carve out of the property developer and the subsequent entry of the US fund Värde has represented a new chapter in the battle between Susana and Yolanda García-Cereceda, both daughters of the founder of Procisa, Luis García Cereceda, who died in 2010, and both heiresses of the family empire.

As a result of this latest encounter, a ruling from Commercial Court number 11 in Madrid, on 18 August, decided to partially adopt the injunction requested by Mercedes López, the mother of Susana and Yolanda García-Cereceda, regarding the total carve out of Procisa.

The carve out of Procisa

The carve out was approved at a general shareholders’ meeting held on 26 July 2016. Specifically, the shareholders approved the decision to divide Procisa’s assets between La Finca Global Assets – owner of the carved out company’s real estate assets, which manages the leases of the offices and retail premises; La Finca Somosaguas Golf – which included ownership of a urban development area for luxury residential use that can be executed immediately, known as Casablanca – and finally, La Finca Promociones y Conciertos Inmobiliarios (owner of Procisa’s remaining assets and liabilities).

This carve out plan also involved the entry of the US fund Värde into the office business, as Expansión revealed in April.

This line of business is the group’s most profitable and it includes, amongst other assets, La Finca business park, located in Pozuelo de Alarcón, whose tenants include multinationals such as Orange and Microsoft.

Entry of Värde

Procisa, chaired by Susana García-Cereceda, had reached an agreement to sell 40% of its office business to the fund Várde, with Procisa retaining ownership of 100% of the residential business.

According to that plan, Susana García-Cereceda would lead the two areas. The entry of new members with experience and background in the sector was also planned, to complete the organigram of the new real estate company.

Nevertheless, this decision had not been approved by all of the company’s shareholders. Some voices against the negotiations argued that the complete carve out had not been referred for consultation to the Tax Authorities or other tax bodies to confirm the existence or otherwise of tax benefits in terms of exemption from Corporation Tax.

According to sources close to the opposing shareholders, if there are no tax benefits in terms of Corporation Tax, then the younger daughter of García-Cereceda, Yolanda, and her children, would be “seriously harmed”.

The legal ruling on 18 August requires the Commercial Registrar to suspend the inscription of the corporate operation agreed at the general shareholders’ meeting in July. This decision, therefore, hampers Värde’s entry into Procisa’s office business. (…).

According to the ruling, the suspension must remain in force until the Tax Authorities have issued their binding opinion regarding the existence or otherwise of tax benefits in terms of Corporation Tax. (…).

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

Park Street Advisors Pulls Out Of Husa Rescue Plan

9 May 2016 – Expansión

Park Street Advisors, the London fund specialising in distressed assets, which was going to come to Husa’s rescue, has got cold feet. The group has ruled out the possibility of developing the agreement that it had reached with the Gaspart family to create a joint venture to take control of the parent company, Chain, and inject €1.5 million to ensure its continuity.

Sources close to the company owned by the Gaspart family have confirmed that “this operation will not go ahead”, although “they do not rule out possible future collaborations”.

The agreement with Park Street was announced in January last year, when Husa tried to convince its creditors to approve an agreement that proposed a discount of 95% on its €221 million debt. In exchange, the company committed to return €5 million over the next five years, thanks to the agreement with Park Street, and whereby ensure the continuity of the business that has maintained the group.

Joan Gaspart (pictured above) managed to obtain approval for the agreement from the group’s four main companies last summer; the others filed for liquidation. Over the last few months, they have been filing for bankruptcy, with a view to liquidating some of the other small companies, such as Husa Service Hostelería, which recently suspended its payments in Commercial Court number 3 in Barcelona.

Last summer, the agreement with the Treasury and Social Security, to whom Husa still owes €20 million, remained pending.

Although that matter has still not be resolved, the official of Commercial Court number 3 in Barcelona raised preliminary protective measures under which all of Husa’s companies would remain active.

In its heyday in 2007, the chain owned by the former President of FC Barcelona and the President of Tourism in Barcelona, managed around 200 assets, of which around 140 were hotels and the rest were restaurants. The chain currently operates twelve hotels in Spain and Belgium.

But not all of the business was lost. In recent years, prior to the creditors’ bankruptcy, the Gaspart family transferred some of the hotels that it operated, mainly those that worked the best, to another family company called Atiram, which is run by Joan Gaspart’s daughter, María Gaspart Bueno, as the sole director.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake

A Group Of Funds Takes Control Of Catalan Firm ‘Habitat’

29 May 2015 – Finanzas.com

A group of investment funds has taken control of the Catalan real estate company Habitat, after the judge gave the green light to the proposed agreement that they had submitted.

According to reports by El País, the company will now end up in the hands of firms such as Goldman Sachs, Bank of America Merril Lynch, Capston, Marathon and SC Lowy; whilst the Figueras family, which founded the real estate company, will retain a minority stake. The new owners will retain the current management team.

The company, whose debt initially amounted to €1,800 million, sought refuge in the new bankruptcy law at the end of last year after it proved impossible for it to adhere to the repayment calendar established under the previous agreement.

The investment funds have acquired Habitat after purchasing Habitat’s loans at a significant discount from banks and Sareb, the so-called bad bank, and they presented another proposed agreement to the Commercial Court number 3 in Barcelona, which was approved in the end.

The funds will become the new owners of the real estate company by converting their debt into equity.

Original story: Finanzas.com

Translation: Carmel Drake

Reyal Urbis Appeals To Judge To Advance Its Payment Plan

27 March 2015 – Expansión

Negotiations / The real estate company, which has a debt of €4,000 million, has appealed against the judge’s request to change and clarify certain points of its proposed agreement.

The negotiations to enable Reyal Urbis to emerge from bankruptcy have taken an unexpected turn. The real estate company, chaired by its largest shareholder Rafael Santamaría, has decided to appeal against the request from the judge in charge of the bankruptcy process to modify various points of its proposed agreement.

The decision by the real estate company to postpone the changes requested by the judge has come as a surprise, given the very difficult situation it finds itself in. Reyal Urbis has debt amounting to €4,435 million, whilst its assets are valued at €1,345 million. Moreover, it has an equity deficit of more than €3,000 million.

In 2014, the company recorded a loss of more than €694 million. It has not made a profit for five years, due to the depreciation of its real estate assets and declining sales.

On 6 March 2015, the judge Franciso Javier Vaquer, head of the Commercial Court No. 6 in Madrid, asked the company to remedy deficiencies in the feasibility plan that it had presented a few days earlier. The proposal by Reyal Urbis included a discount of 90% for those creditors with mortgage guarantees from bilateral loans. In the case of creditors of syndicated loans, which included entities such as Santander, Sareb and Barclays, the real estate company proposes two options: one of them involves a discount of 90% and the payment of the balance using certain assets (Reyal reserved some of its portfolio, worth €260 million, for itself).

The second alternative is a discount of between 88% and 93% and a six year wait for the payment of the remainder, with a grace period of four years. In both cases, the discount to be applied “far exceeds the legal limits”, something which is not justified in the feasibility plan presented by Reyal Urbis, according to the judge.

Moreover, the judge also considers that in its business plan the real estate company does not explain how it is going to obtain the funds to pay the remainder of the debt.

These high discount rates would not apply to the Tax Authorities, another one of Reyal Urbis’s creditors, with a liability of €400 million, which the judge asks them to justify “if the bankrupt entity is willing to grant the AEAT (State Tax Administration Agency or Agencia Estatal de Administración Tributaria) unique, special or beneficial treatment that differs from that offered to other creditors of equal ranking (…), then Reyal should explain all of the details behind the unique, specific or preferential treatment or treat AEAT in the same way as it would treat creditors of similar loans with no option to refer to a subsequent agreement”.

The “Drag effect”

In its proposal, Reyal Urbis clings onto the bankruptcy reform law, approved last year, to obtain its exit from bankruptcy, even without the support of all of its creditors. “The company interprets that Article 121.4 of the Insolvency Act allows a vote in favour of the proposal by 75% of the creditors (by grouped liabilities) of the aforementioned syndicated loan to “drag” the remaining 25%”, they say at the company. This is something the judge rejects, since the waiver of the rights to receive (funds) should be made expressly.

The appeal raised against the judge’s request has surprised the financial creditors, which had expressed their willingness to accept significant discounts in exchange for holding onto the assets that were already provisionally awarded through the drawing of lots, and which featured as collateral in the refinancing agreements signed in previous years.

The main creditors believe that these changes requested are necessary, before they will consider submitting the possibility of accepting this plan or not to their respective boards of directors. If it fails to gain the support of the majority of the debt holders, Reyal Urbis will have to follow in the steps of its counterpart Martinsa Fadesa, which is in the middle of liquidation.

Nevertheless, the creditors have not completely given up on the process and believe that the appeal may afford Reyal extra time to present a proposal by consensus.

Original story: Expansión (by R. Ruiz and S. Arancibia)

Translation: Carmel Drake

Sareb Calls For Changes To Reyal Urbis’s Proposed Agreement

10 March 2015 – Expansión

Negotiations / The real estate company’s main creditor shares the legal concerns raised by the judge regarding the proposed agreement. If they are addressed, a discount of up to 93% could be accepted.

The real estate company Reyal Urbis is using up its last options to save itself from liquidation. The company submitted a proposed agreement on 13 February, which must be approved or rejected by its creditors before next Friday 13 March. Nevertheless, the proposal that has been presented has raised important questions that have lead the judge in charge of the bankruptcy process to reject the offer and ask Reyal for a series of changes and clarifications.

The judge from the Commercial Court number 6 in Madrid is not the only party for whom this proposal to exit the bankruptcy process has raised doubts. Sareb, the main creditor of Reyal Urbis with a debt of €785 million, sent a letter to the court last week expressing its concerns. Last Friday, the judge himself made these concerns clear through a series of requests to the real estate company. One of Sareb’s demands is to know the current value of Reyal Urbis’ assets, through the performance of a new appraisal.

One of the aspects that has generated the most doubt, for both the judge and Sareb, relates to the application of the agreements and waivers to all of the creditors, even those that do not sign up to the agreement. Reyal is making its own interpretation of the recent regulatory changes in the bankruptcy law whereby, if 75% of the creditors adhere to the payment proposal, then rest should waive the mortgage rights they obtained during the four refinancings that the company signed before it filed for bankruptcy. The judge considers that it cannot be assumed that all of the creditors will waive (their rights) or that the “knock-on effect” will apply.

Another controversial point is the high percentage of the discount that Reyal is calling for, which ranges between 88% and 93% for the creditors with syndicated debt (which includes Sareb and entities such as Santander, RBS and Barclays), without offering a credible business plan. In his ruling, the judge demands that (Reyal Urbis) “correct the weaknesses identified in its feasibility plan, in order to provide the necessary and essential objective justification of the discounts requested”.

Reyal has until the end of March to clarify these points and also whether it has a parallel agreement with the Tax Authorities. The real estate company intends to use some of the assets that it does not grant to the creditors (valued at €260 million and chosen by the company) as a guarantee to the Tax Administration.

With the new proposal on the table that resolves the possible uncertainties regarding the distribution of assets, the creditors will consider whether to sign up to the agreement, or conversely, let the real estate company go under, as happened with its counterpart Martinsa Fadesa. Sources close to the creditors believe that the two cases are not the same and that the entities may give Reyal a chance, just like they did with Fernando Martín’s company in 2011.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Judge Asks Reyal Urbis To Rectify Errors In Its Creditors’ Agreement

9 March 2015 – Expansión

The judge at the Commercial Court number 6 in Madrid has ruled that the real estate company Reyal Urbis must present additional documentation and perform “certain rectifications” to the draft agreement that the company presented to exit from its bankruptcy proceedings.

The real estate company, which filed for bankruptcy in February 2011, submitted a payment plan to the court, containing a proposal for the settlement of the €3,978 million debt that it owes.

Reyal Urbis has offered its creditors, which include banks such as Santander, Popular and RBS, as well as Sareb and ICO, a discount of more than 80% on its liabilities and to pay the remaining debt with assets.

The real estate company holds assets amounting to €1,474 million, after it sold several buildings such as the ABC Serrano shopping centre in Madrid. It has just agreed with the tax authorities that it will pay its debt in full, which amounts to around €400 million, but over a long period of time.

The request made by the Commercial Court suspends the period for achieving agreement, which would otherwise have become effective before 13 March.

Martinsa Fadesa

Meanwhile, the Commercial Court in La Coruña has announced the opening of the liquidation phase of Martinsa Fadesa, which owns €6,600 million, after the real estate company failed to obtain support from its creditor banks for a new banking agreement.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake