Martinsa And Reyal Face Liquidation With €7.5 Billion In Debt

22/12/2014 – Expansión

FUTURE / These two real estate companies are on the brink of extinction as they have not yet reached an agreement with their creditors to restructure their balance sheets. In January, the extension of the legal provision allowing them to not record their assets’ losses in value will end.

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Once giants in the Spanish economy and now on the brink of disappearing — this is the bitter road that Martinsa Fadesa and Reyal Urbis have been on over the last eight years. The future does not look so bright for the two largest real estate companies of the last decade, as they have not yet reached an agreement with their banks to clean up their accounts.

The two real estate companies’ financial debt totals at more than €7.5 billion; liabilities that stem from the financing obtained throughout the real estate bubble and that the companies have been bearing over the last couple of years in their balance sheets.

The most extreme case is that of Reyal Urbis. The real estate company filed for bankruptcy in February 2013 and has not yet reached an agreement concerning its financial situation. With a debt of €3.978 billion, according to the bankruptcy report, in addition to a net worth gap of €2.878 billion, Rafael Santamaría’s company only has assets worth €1.474 billion. After four refinancing attempts, the banks have chosen to agree with the realtor to sell off some of its assets in order to obtain liquidity. Without these properties, which used to generate the little income it has now, Reyal Urbis looks headed towards an orderly liquidation process.

No agreement

Although it seems as though Reyal’s future will be decided next year, Martinsa Fadesa’s future will be known shortly. The realtor has been negotiating new payment conditions with its creditor bank for the past eight months, after failing to cope with the first debt reimbursement in December 2013 that was set forth in the agreement resulting from the bankruptcy proceedings in 2011.

The real estate company, which owes €3.5 billion to its banks in addition to the liabilities of commercial creditors and the tax agency, only sees one viable option: to receive relief on 80% of its debt and pay off the rest with its assets or shares, especially those of its foreign subsidiaries. The bank would accept a significant debt relief in exchange for Fernando Martin, president and leading shareholder of the group, ceding some degree of control over the management of the company.

These entities, which are awaiting a new proposal from Fernando Martín, firmly rejected the company’s last request for refinancing on favorable conditions. Since there is no agreement as of yet, the creditors are already preparing for liquidation of the company.

Another real estate company that finds itself in trouble is Nozar. In the case of the Nozaleda family’s real estate company, which filed for bankruptcy in 2009, the financial institutions are in opposition and have not yet come to an agreement. While Iberia Investments Limited, Hypothekenbank Frankfurt, Sabadell and Bankia have backed a proposal which includes a debt relief of up to 50%; BBVA, Santander, Popular and CaixaBank have opposed it. The bankruptcy trustees do not support this plan either.

After having approved the agreement in September, the judge must respond to the appeal. In this case, an agreement between the creditors and the Nozaleda family does not seem possible, thereby placing the final decision in the hands of judicial authorities.

Negotiations between these three real estate companies and their creditors took place just a few weeks prior to expiry of the extension of the Royal Decree-Act 10/2008, which allows companies to avoid dissolving due to the losses generated by depreciation of assets. In the last extension, granted earlier this year, Spanish Government officials warned that this was the last time the law could be extended and called on troubled companies to sort out their situation within 12 months. Now, even amongst industry insiders, it is understood that a further extension would be meaningless, having had six years to solve their financial problems. Without further extension, Reyal Urbis and Martinsa Fadesa will file for liquidation, so the next days seem vital for their future.

Original article: Expansión (by Rocío Ruiz)

Soros Becomes Strategic Partner of FCC

18/11/2014 – Cinco Dias

U.S. investor George Soros will become the strategic partner of Esther Koplowitz (both pictured) in FCC through a €1 billion capital increase agreement. Thereby, Soros will take on the entire increase amount corresponding to the businesswoman.

George Soros, currently holding a 3.8% share in FCC, will underwrite to 25%. The investor will inject €650 million and buy the pre-emptive subscription right. The price of the new shares has not been disclosed yet.

The contract is said to have been signed for a 4-year term and it implies ratification of the present managing board of the company.

FCC has come to agreements with 75% of its banking lenders, hoping to do the same with the rest. As the firm’s CEO Juan Bejar explained, the talks concern amortization of its €900 million debt and a 15% forgiveness.

Debt Amortization

The builder controlled by Esther Koplowitz will thereby liquidate a €1.39 billion tranche of the amount owned by the group. It currently pays an 11% interest rate bound to rise to 16%.

This way, in case of non-payment, the liabilities will upsurge to nearly €2.26 billion by 2018, and if FCC fails to pay it off again, the banks will seize its shares.

Therefore, the firm is going to intend the €1 billion increase for amortization of 21% of the total debt.

Specifically, €765 million will be destined for liquidating €900 million of this tranche thanks to this 15% release permitted by banks.

Furthermore, €100 million will be received by Cementos Portland, €100 million by FCC Environment and €35 million will be consumed by the transaction costs.


Original article: Cinco Días

Translation: AURA REE

Sareb & Popular Get Equity Stakes in Renta Corporación

12/11/2014 – Expansion

At the latest Renta Corporación stakeholders’ meeting, a capital increase was approved which will allow four banks to grab 14% of the firm’s capital in exchange for debt cancellation. Namely, Sareb, Banco Popular, ING and Banco Caixa Geral opted for the swap inside the last covenant arrangements.

Once the green light given to the operation, €5.6 million in new shares at €1 face value each will be issued, representing 14% of the company’s social capital fixed at €32.88 million in total.

Sareb will take a 4.9% share by swapping the debt proceeding from Caja Madrid and Bancaja. Banco Popular has got a right to 4.1%, ING Real Estate to 2.9% and Banco Caixa Geral to 2.8%. Deutsche Bank which held a 2.8% stake finally split it half and sold to two investors.

The increase hands 14% over to the banks, 7% remains in possession of other significant shareholders and the rest of Renta Corporación belongs to its president Luis Hernandez de Cabanyes (32%) and Blas Herrero (8%). The free float makes 39% available.

The stakeholders also agreed that two payment schemes will apply in 2014, one in favor of the emplyees and directors and the other in benefit of Renta’s CEO, David Vila.

On the Stock Market

Floated in 2006, the firm has been suspended since March 2013 when it went bankrupt. However, last October 30th, Renta Corporación returned to the stock exchange market and appreciated 154% to 1.45 €/share in the very first day.  Since then, the price has been fluctuating and currently the shares stand at €1.11 each.


Original article: Expansión (by M. Anglés)

Translation: AURA REE

Sareb, ING & Popular Swap Renta Corporación’s Debt For Equity

23/10/2014 – Expansion

The five financial entites that composed the syndicate loan of Renta Corporacion have ruled out relief and time extension of its debt and have opted for debt to equity swap. Thus, the banks which became the new shareholders of the firm are: Sareb (a 4.9% stake), Banco Popular (4.1%), ING Real Estate Finance (2.9%), Deutsche Bank (2.8%) and Caixa General (2%).

Renta Corporacion overcame the state of insolvency this July and currently it faces in lieu payments, accounting a part of relief approved by the lenders and the swap for equity, with a goal set at cutting deeply in its total, €180 million indebtness to a mere €10 million.

In the first nine months of the year, the company earned net €29.8 million. Of the amount, €1.6 million proceeded from its ordinary activity and €28.1 million from the extraordinary one, meaning an in lieu payment in assets securing the syndicate loan, as well as relief and other effects of the bankruptcy process.

In the upcoming weeks, the property manager will return to the stock exchange market.


Original article: Expansión (by M. Anglés)

Translation: AURA REE