Oceanwood to Strengthen its Position in NH Following €280M Capital Increase

8 May 2018 – Expansión

The British investment fund Oceanwood is going to strengthen its position in the hotel chain NH Hotel Group, of which it is currently the second largest shareholder with a 12% stake, following the capital increase that the company is expected to carry out in the near future.

The hotel chain is going to increase its share capital to finance a convertible bond issue undertaken in 2013, which is due to expire at the end of this year, but which may be exchanged for shares before the end of that period, in accordance with the conditions of the issue.

NH will handover 50.8 million shares to the bondholders, equivalent to 14.5% of the existing share capital. The company already has 7.5 million own shares, and so the capital increase will involve the issue of 43 million new shares, which at current market prices represents a total sum of around €280 million. With this operation, NH will manage to reduce its debt with the issue of new shares and will thereby advance with its objective to improve its level of leverage.

Of NH’s major shareholders, Oceanwood was the only one to participate in the issue, subscribing almost 30% of the debt, which means that its stake will amount to 15.5%, whilst HNA, with 29.5% of the share capital and Grupo Hespería, in the hands of the businessman José Antonio Castro, with 9%, will see their stakes in NH diluted. The price of the conversion was set at €4.92 per share back in the day, whereas NH’s share price closed yesterday at €6.43, which implies a 30% appreciation over the conversion price.

Although the bond is not due to expire until November, the Board of Directors has the authority to force its conversion ahead of time given that one of the conditions included to that effect in the brochure has been fulfilled. Specifically, the conditions of the issue indicated that in the event that NH’s share price rises above €6.39 for more than 20 days during a 30 day period, then the company could force the conversion. That situation was achieved last week. The board met on Wednesday to present the company’s results.

Last October, NH announced that it had fully repaid and cancelled all of the senior debt obligations issued amounting to €250 million, with maturity in 2019 and whose principal pending payment amounted to €100 million.

The group’s gross debt amounted to €736 million at the end of last year and the bulk of that debt is due to mature in 2023.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Santander & Blackstone Sign €7.3bn Loan for their Joint Venture

19 March 2018 – Expansión

Santander and Blackstone are moving forward with the creation of the joint venture that is going to hold the former real estate portfolio of Popular. The US firm controls 51% of the company’s share capital and also manages the assets, for which it has paid around €5 billion. Meanwhile, Santander retains 49% of the shares.

The joint venture is going to group together assets with a gross value of €30 billion. Within the framework of the agreement, the assets were appraised at €10 billion, the book value at which they are recorded on Popular’s balance sheet following the clean up applied by Santander.

The balance sheet of the joint venture, known as Project Quasar, is going to be backed by around €3 billion in capital to be contributed by the two partners and debt. In this sense, the company owned by Santander and Blackstone has just closed a syndicated loan agreement led by Morgan Stanley and Deutsche Bank amounting to €7.3 billion. Blackstone is also participating in the syndicate, through one of its companies, and will contribute €1 billion, equivalent to 14% of the total financing.

Conditions

The loan has been signed for a five-year term and is due to mature on 15 May 2023. The interest rate has been fixed at 1-month Euribor, with a floor of 0% and a spread of 3.15% for the first three years. From the fourth year onwards, the differential will increase to 3.25%. 1-month Euribor currently stands at -0.371%.

The loan has an initial commission of 0.8%. In turn, Santander and Blackstone must allocate 70% of their joint company’s net income to repaying the debt. According to financial sources, the price of the loan is in line with the conditions of the assets owned by Blackstone and Santander’s company. Although the joint venture’s portfolio comprises foreclosed assets and non-performing loans, the transfer of those assets to the new firm has been performed at around one-third of their nominal value; moreover, the assets have mortgage guarantees, which has allowed Santander and Blackstone to reduce the cost of its financing.

It is also worth noting the ranking that the loan has in the debt structure of the company. It is a senior liability, which means that it has collection preference over other claims. Ultimately, add the sources, it is the owners and not the banks who are going to be left with the asset risk (…).

Popular’s package of assets, included in the agreement with Blackstone is broken down as follows: €1.9 billion in properties; almost €3.2 billion in loans proceeding from real estate activity; and €4.3 billion in other types of assets linked to the property development sector, including deferred tax assets (…).

If the operation is not completely finalised by 31 March, the agreement for the joint venture may be terminated at the behest of either partner.

Original story: Expansión (by M. Martínez & I. Abril)

Translation: Carmel Drake

San José Will Surrender 35% Of Its Capital If It Fails To Repay Loan

25 June 2015 – Bolsa Manía

San José will surrender shares representing up to 35% of its total capital to a group of six banks to repay a €100 million loan, in the event that it fails to repay said loan before its maturity date in October 2019.

The entities that have signed this loan agreement are: Banco Popular, Barclays Bank, Bank of America Merrill Lynch, Deutsche Bank, Sareb and KutxaBank.

To this end, San José’s shareholders’ meeting has approved the issue of “warrants” in favour of these entities. These warrants are securities that include the option to subscribe to shares in the company to offset any debt.

The loan linked to these warrants is one of the tranches that San José restructured after it reached a refinancing agreement at the beginning of the year. This agreement already required the surrender of its entire real estate division to the banks to repay the majority of its liabilities (€1,329 million).

The rest of the debt (€297 million) was divided into three tranches, one of which provides for the repayment of the liability in the event of non-payment of the loan on the maturity date, in four years time.

San José subjected its refinancing agreement to a judicial homologation process, in order to extend the agreement, reached with the majority, to all of its creditor entities.

Thus, Sareb and KutxaBank are included in the agreement and will have “warrants” even through they rejected the restructuring agreement, according to the shareholder documentation provided by the construction, services and renewable energy group.

New growth phase

In its presentation to shareholders, San José said that this refinancing agreement adapts the maturity dates to the cash flow streams and provides the company and its subsidiaries with sufficient financing lines to properly perform their activity and embark on the new growth phase.

The company highlighted the increase in its international business, which now accounts for more than half (59%) of total revenues, and the prevalence of its non-residential construction works, which dominate 87% of the business.

The shareholders of the company led by Jacinto Rey also agreed to appoint José Manuel Otero Novas as an external director of the company.

Original story: Bolsa Manía

Translation: Carmel Drake