12 August 2015 – Cinco Días
The Socimi, Merlin Properties, now owns 77% of the real estate company Testa and has paid consideration of around €1,465 million to date.
The construction company, Sacyr, was not expected to cede this stake in its subsidiary until March 2016.
The process to sell Testa, the former subsidiary of Sacyr, is moving faster than expected. The deadlines have been accelerated as the construction company chaired by Manuel Manrique has overcome various obstacles in order to generate some cash from the transaction. The restructuring of the debt and the release of the pledge over the shares in the real estate company linked to its stake in Repsol, have allowed Merlin Properties to take ownership of an additional 26.9% stake in the real estate company today for around €375 million, according to banking sources. By the end of the day, the Socimi will control 77% of the company.
On 9 June, Merlin announced its purchase of Testa for €1,793 million. The operation was designed to be completed in several stages. During stage one, the Socimi, which boasts Ismael Clemente as its CEO, acquired 25% of the real estate company. The remaining shares were pending the release of a pledge over the shares linked to Sacyr’s debt. This was because when the construction company restructured its €2,272 million liability, it pledged its 9% stake in Repsol (amongst other assets) as a guarantee. On 23 July, Merlin paid €861 million for a 25.1% stake in Testa. Sacyr was forced to allocate €600 million of the consideration received at the time, to paying off its debt with creditor banks. In turn, the Socimi took ownership of the majority of the shares as a result of its disbursement.
As such, Sacyr was able to return to renegotiate its debt and reduce the percentage of Testa’s shares secured by its shareholding in Repsol. As such, the construction company has now been able to accelerate the sales process of the next package (of shares) to be acquired by Merlin – this change in control was not originally scheduled to take place until March 2016. The same sources state that the consideration (€375 million) that the Socimi will disburse today will go straight into Sacyr’s coffers, with no obligation to reduce its liabilities, and may be allocated to its operational needs. The remaining shares in Testa continue to be pledged by the shareholding in Repsol.
In total, Merlin has now paid around €1,465 million for the three share packages in a period of just two months.
In terms of the remaining 23% stake, the sales period is due to close on 30 June 2016. Merlin’s ultimate objective is to turn Testa into a Socimi and subsequently merge with it. Based on the information provided, the transaction will give rise to the largest real estate company in Spain, with assets worth around €5,500 million, including the Torre PwC, one of the four skyscrapers in the Norte Castellana business district in Madrid. According to the purchaser, these buildings, which are primarily leased as offices, will generate gross annual revenues of approximately €290 million.
In addition, Clemente said last month that Merlin will sell off Testa’s residential and hotel portfolio, which represents around 15% of its total portfolio.
Original story: Cinco Días (by Alfonso Simón Ruiz)
Translation: Carmel Drake