Villar Mir Sells 10% Of Colonial To Support The Expansion Of OHL

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.”

Shares guarantees

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

Town Hall Seeks To Resume ‘Canalejas’ Construction Work

20 July 2015 – El Confidencial

Almost four months have passed since Madrid Town Hall’s Department of Town Planning decided to suspend some of the construction work at the monumental Canalejas Project, as a precautionary measure. The council, which was led at the time by Ana Botella, took the decision because it considered that some of the demolition work being carried out by the Villar Mir Group was affecting certain areas that are protected due to their historical value and was exceeding the work permitted by the municipal licence.

Following the electoral change, the new team responsible for Town Planning at Madrid’s Town Hall, led by Manuela Carmena, seems willing to resolve this situation as soon as possible. According to sources close to the project, the council is working to create a technical committee that will allow the works to recommence, however the Town Hall has denied that this is the case, at least for the time being. (…).

At the end of 2012, the Villar Mir Group purchased seven buildings located on Plaza de Canalejas (number 1), Carrera de San Jerónimo (number 7) and Calle Alcalá (numbers 6, 8, 10, 12 and 14) from Banco Santander. The group paid more than €200 million for the buildings and with an additional investment of around €300 million, is going to create a unique complex that will house around thirty luxury homes, a shopping centre measuring 16,000 m2 spread across three floors and a five-star hotel to be operated by the Four Seasons chain with 215 rooms and measuring 26,000 m2.

To achieve this, all of the buildings need to be joined up and to make that possible, Madrid’s Town Hall (PP) changed the protection in place on some of the buildings a few months ago. Specifically, it reduced the ‘Building of Cultural Interest’ protection to the front bay (crujía) and roof of the building at Canalejas, 1 and the front bay (crujía) and patio at Alcalá, 14; it also reduced the protection on all of the buildings to confine it to the façades.

Suspension of the building work

And it was the work performed on the front bay (crujía) between Calle Alcalá, 14 and Plaza de Canalejas, 1 that led to the stoppage of the works, as the Town Hall considered that protected pillars, slabs and stairs had been demolished…Nevertheless, sources linked to the project say that all of the work has been performed in accordance with the scope of the licences granted. The rest of the works – which affected 90% of the complex – have continued in the meantime, in accordance with the licences obtained.

In order to resume the suspended work, the planning experts consulted say that the licence for the next phase of the work needs to be granted, i.e. the licence for the new construction work. And for that to happen, the construction company must legalise their actions. The creation of a technical committee could accelerate the process, whereby leaving the final decision in the hands of professionals and not Madrid’s Town Hall.

It is worth remembering that Canalejas, along with other projects such as Operación Chamartín, Campamento and the shopping centre that is planned for Madrid Río, are coming under the spotlight of the new mayoress, Manuela Carmena, who is now less critical of these projects than she was in her electoral program. Carmena recently met with Antonio Béjar, the head of the Distrito Castellana Norte project, and promised that she would evaluate the most important urban planning project in the capital.

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake