Tag: Oceanwood

Liberbank’s RE Clean-Up Exercise Echoes Santander’s Deal For Popular

30 October 2017 – Expansión

Liberbank has learned the lesson that Santander taught the market a few months ago when it teamed up with Blackstone to divest almost all of the damaged real estate risk that Popular had held. The bank led by Manuel Menéndez has now also joined the trend of selling most of the capital of a new company, but retaining a stake in it so as to benefit from the future recovery in real estate prices.

The entity, which has just launched a capital increase amounting to €500 million, has also announced that it has created a company using real estate assets that have a book value of €602 million; Bain Capital will own the majority stake (80%), and the remaining 20% will be shared between the bank itself, with a 9.9% stake, and Oceanwood, with a 10.1% stake. Oceanwood is an investment fund that is the largest individual shareholder in Liberbank, with a stake of just over 12%, after the stakes held by banking foundations that gave rise to the entity.

Under pressure

The European supervisory authorities and the main international investment funds are putting pressure on the European banks to divest their toxic assets as soon as possible in order to recover the profitability lost in recent years, having overcome the worst of the financial crisis (…).

When Santander purchased Popular for €1, the first decision that it made public was that of putting all of Popular’s problematic real estate assets up for sale.

To that end, it decided to increase the coverage ratio of those assets to more than 60%, charging it against Popular’s reserves, to allow it to find a buyer more easily. In the end, it decided to accept Blackstone’s offer, which valued the entire real estate portfolio at €10,000 million and which saw the investment fund acquire 51% of the new company and Santander hold onto the remaining 49%. For Santander, the operation was attractive because it allowed it to immediately recover €5,100 million, it removed Popular’s real estate risk from the balance sheet and it left the door open for the entity to recover more money in the future to the extent that Blackstone proceeds to sell the new company’s assets.

Liberbank has done the same, although in a smaller proportion. In its case, the volume of assets is substantially smaller, €602 million compared to €30,000 million in Popular’s portfolio; moreover, its share of the new real estate company is also much smaller; it will be left with a 9.9% stake, whilst Santander owns 49% of its company.

But the result is similar. Liberbank is removing a very significant percentage of the damaged real estate risk from its balance sheet by the same means as Santander did. Raising the coverage ratio of these assets to a sufficient percentage so that an investment fund like Bain Capital Credit, and also Oceanwood, are willing to invest a not inconsiderable amount of money.

Investment

If the valuation of Liberbank’s assets is the same as those of Popular, Bain and Oceanwood will have invested just over €230 million in the operation.

A notable difference with respect to Popular’s operation is that there is a third player in Liberbank’s case. The fund Oceanwood, the bank’s largest shareholder after the banking foundations, which has also committed to participating in the capital increase in an even higher proportion to the amount that corresponds to it based on its current stake, has also decided to form part of the new real estate company, which will be constituted as a Socimi. Those two decisions may be interpreted as a clear commitment that the entity will be worth more in the future than it is at the moment and as a clear vote in favour of the current management team (…)

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake

Bain Establishes Joint Venture To Manage Real Estate Asset Portfolio From Liberbank

24 October 2017 – Bain Capital Credit

Bain Capital Credit, LP announced today that it has entered into a binding agreement to establish a joint venture company, which will own and manage a portfolio of repossessed real estate assets from Liberbank. Bain Capital will control and manage the JV with an 80% stake; the two other shareholders are Liberbank and Oceanwood. Bain Capital Credit now owns and manages ten loan and real estate portfolios in Spain.

The portfolio has an appraisal value of more than €600 million and primarily comprises residential units, land and work-in-progress (WIP) assets across Spain. Bain Capital Credit will actively manage the portfolio, including developing some of the land and WIPs.

“We are excited to expand our position in the Spanish real estate market and to control the majority of this JV alongside Liberbank and Oceanwood,” said Alon Avner, a Managing Director and Head of Bain Capital Credit’s European business.

“We continue to consider Spain one of the most attractive real estate markets in Europe and this portfolio’s concentration in central and northern Spain provides a great degree of diversification for our portfolio,” said Fabio Longo, a Managing Director and Head of Bain Capital Credit’s European non-performing loan & real estate business. “This is a great opportunity to participate in Spain’s recovery and to further expand our footprint in the Spanish residential development sector. Furthermore, this investment showcases our expertise in executing complex transactions that require close collaboration with the seller under compressed timelines,” added Mr Longo.

The support in executing this deal was provided by Altamira Asset Management, as real estate servicing specialists; Aura REE and Basico, as real estate valuation specialists; and Cuatrecasas, as legal counsel.

Original story: Bain Capital Credit

Edited by: Carmel Drake

 

Liberbank Sells €602M RE Portfolio To Bain & Oceanwood

23 October 2017 – Expansión

Liberbank has signed a binding agreement for the constitution of a new company together with Bain Capital Credit and Oceanwood – one of Liberbank’s current shareholders with a 12.7% stake – to which it will transfer a portfolio of real estate assets worth more than €600 million.

Specifically, the entity will transfer real estate assets with aggregate gross debt of around €602 million, of which €180 million (40%) corresponds to land and work-in-progress projects; €80 million to tertiary assets; and €342 million to residential products, according to a report submitted by Liberbank to Spain’s National Securities Market Commission (CNMV).

As a result, Liberbank will hold a 9.99% stake in this portfolio of foreclosed properties, whilst Bain Capital Credit will hold 80% of the new company, and Oceanwood will hold the remaining 10.01% stake.

Bain Capital Credit will be responsible for managing the assets in the new company following the completion of the operation, scheduled for before 31 December 2017, once the terms of the agreement have been fulfilled. According to its reports, Liberbank held sufficient provisions as at September 2017 to cover the impact resulting from the sale of this portfolio.

In this way, taking into account the direct sales of gross debt relating to real estate assets amounting to €209 million that the entity undertook during the third quarter, Liberbank has “already” fulfilled its objective of reducing its exposure to real estate assets by more than €800 million during the second half of this year, which the entity revealed when it announced its capital increase.

During this year, Liberbank plans to sell more than €510 million in non-performing assets on the retail market and, whereby, reduce its exposure by more than €1,000 million. So far this year, that figure amounts to €1,045 million, excluding the direct sales forecast for the fourth quarter.

The bank led by Manuel Menéndez decreased its portfolio of non-performing assets by 29% during H1 and by December, that decrease will have increased to 43% in two years thanks to the operation signed with Bain and Oceanwood.

Through this agreement, Liberbank expects to achieve a non-performing asset coverage ratio (NPA) of 49% (…) a Texas ratio of 94% and a CET1 (fully loaded) ratio of 12.2% as at the end of September, including the transfer of assets and the capital increase approved by the General Shareholders’ Meeting on 9 October.

€500 million capital increase

A few weeks ago, Liberbank’s shareholders approved a €500 million capital increase, which the entity will launch following the presentation of its results for the third quarter, which will take place on Tuesday 24 October (…).

Original story: Expansión

Translation: Carmel Drake

Bain Submits Highest Bid For Liberbank’s Real Estate

10 October 2017 – Expansión

One of the main elements of the strategic plan launched by Liberbank to rebuild its financial health is entering the home stretch. The bank has now received offers from all three of the suitors who have reached the final phase of the sale of the portfolio of real estate assets worth €800 million. And, according to financial sources, the bid from the US fund Bain is the highest. But, Bain is not alone. KKR and Blackstone have also submitted binding offers, however, the cheque that the former is willing to sign is larger than those of the others, add the same sources.

Nevertheless, that does not mean that Bain is going to win Liberbank’s open bid. In the final evaluation of the offers, the perimeter that each bid defines (the portfolio primarily comprises homes, but also includes some land) will weigh as heavily as the financing that is going to be used and the tax implications. All of this could mean that the quality of the bids varies significantly, as well as the impact that one or another may have for the results of Liberbank.

In addition, market sources point out that from the date that the offers were submitted until the date exclusive negotiations begin with one of the candidates, last minute movements may arise that tip the balance one way or another.

All of this despite the fact that the calendar proposed by Liberbank does not allow for much time for the bids to be revised or for the processes to be delayed. The objective of the bank is to announce the principle of an agreement with one of the three funds that have submitted offers “imminently”, according to financial sources. And they consider that this is possible because all three of the proposals are sufficiently adequate to reach an agreement.

Capital increase

Liberbank’s intention is to announce the sale of the real estate portfolio before or during its upcoming capital increase, through which it hopes to raise €500 million from its shareholders. It plans to use the funds raised to improve the coverage levels for its non-performing assets, increasing them to almost 50% (still slightly below the average in the sector, which stands at 52%), as well as to strengthen its capital.

Liberbank’s wish is that its shareholders will participate in the capital increase safe in the knowledge that the bank has released €800 million in toxic assets, which will no longer weigh down on its balance sheet. The General Shareholders’ Meeting was due to approve the capital increase on Monday (yesterday) and the objective is that the operation will last 15 days, starting as soon as the legal processes allow.

Liberbank’s main shareholders have committed to participating in the capital increase, which means that Oceanwood, Aivilo Spain and Corporación Masaveu (owners of 12.6%, 7.4% and 5% of the share capital, respectively) will maintain their respective stakes.

The capital increase is the most important element of Liberbank’s plan to convince the markets of its financial solvency, but it is not the only one. The transfer of the real estate portfolio plays an important role, as did the sale of its real estate subsidiary, Mihabitans, to Haya Real Estate for €85 million. That company, which is owned by the fund Cerberus, has taken over the exclusive management of the foreclosed assets of Liberbank and its subsidiaries for a period of seven years.

Original story: Expansión (by Inés Abril)

Translation: Carmel Drake

Liberbank To Increase Capital By €500M To Reduce RE Portfolio

7 September 2017 – RTVE

The financial institution Liberbank is going to increase its share capital by €500 million to “accelerate” the reduction in its real estate portfolio and improve its profitability. The bank, which resulted from the merger between Cajastur-Banco CCM, Caja Cantabria and Caja Extremadura, has set itself the objective of divesting its real estate and doubtful assets, amounting to €800 million, before the end of the year, according to a note submitted to Spain’s National Securities and Exchange Commission (CNMV) on Wednesday.

Liberbank has announced this operation as the prohibition period for the short selling of its shares is due to come to an end. The ban was imposed by the CNMV after naysayers set their sights on the entity following the intervention of Banco Popular and its subsequent purchase by Santander.

On 12 June, the National Securities and Exchange Commission initially established a trading restriction lasting one month, after Liberbank’s share price fell by 40% in just one week, due to the effect of Popular. It then extended the ban for two more months, until 12 September.

The General Shareholders’ Meeting will analyse the capital increase on 9 October

Liberbank’s Board of Directors will propose the €500 million capital increase for approval at the next Extraordinary General Shareholders’ Meeting due to be held on 9 October.

The intention is “to accelerate” its strategic objectives and plan to improve profitability by strengthening its balance sheet and improving its risk profile. Currently, retail mortgage risk accounts for 60% of the entity’s total credit investment, according to Europa Press.

Specifically, the entity expects the default rate to amount to 3.5% by 2019 and for the ratio of foreclosures to fall below 9%; it also expects the coverage ratio to increase to around 50% by the same date.

The forecast return on equity (ROE) is 7% for 2019 and 8% for 2020. The entity plans to pay remuneration to shareholders, which it will charge to the P&L in 2018 with a payout of 20%, which will increase to 40% in 2020.

The major shareholders support the operation

The entity’s major shareholders, which together account for around 68.8% of the total share capital, such as Oceanwood (with a 12.6% stake), Aivilo – Ernesto Tinajero (7.4 %) and Corporación Masaveu (5%), together with the Banking Foundations (43.8%) support this operation and have already expressed their intention to participate in the capital increase, confirmed the bank.

At the end of trading on Wednesday, Liberbank’s shares were trading at €0.97, after increasing by 0.21% during the day. The company’s total share capital amounts to €900.54 million, according to Efe.

Original story: RTVE

Translation: Carmel Drake

Oceanwood Boosts Its Participation in NH Hotels, Reaching 14.3%

 

18 August 2017

The British fund Oceanwood has raised its stake in the NH Hotel Group to 14.3% from 14.1%. Oceanwood has 50.11 million shares of Spanish hotel chain and has consolidated its position as its second largest shareholder, behind the Chinese group HNA, which controls 29.5% of the capital, and ahead of Hesperia, which has 9%. According to information sent to the Spanish National Securities Market Commission (CNMV), of the declared voting rights, 10,012 million (2.86%) correspond to borrowed shares, Europa Press reported.

Original Story: Expansion ProOrbyt

Translation: Richard Turner

NH Finalises Agreement To Manage 28 Hesperia Hotels

5 December 2016 – Expansión

NH is finalising an agreement with the President of Hesperia, José Antonio Castro, which should be signed within the next few days. According to reports from sources close the negotiations, the purpose of the agreement is to renew the hotel chain’s management of almost thirty establishments, owned and operated by Hesperia, for the next nine years.

NH will renew the management of twenty-eight of Hesperia’s hotels, all of which are located in Spain. The agreement also establishes that NH will no longer manage two hotels in Venezuela.

According to the conditions recorded in the memorandum of understanding, NH will pay €31 million for the right to manage Hesperia’s hotels, which will be split into three payments. NH could receive up to €8 million in annual commissions for the management of these properties.

Castro has also committed to investing almost €30 million on the improvement and repositioning of the hotels, and on replacing the Hesperia brand with the NH brand. Moreover, the agreement includes guarantees in the event that Castro does not fulfil some of the clauses set out in the agreement. In this case, NH would have access to a stake in Hesperia’s hotels worth around €40 million.

The negotiations have been going on for almost four months and have been fraught, given that Hesperia is a key shareholder of NH. Hesperia, which first left the management of its hotels in the hands of its investee company, NH, at the beginning of 2009, is the hotel chain’s third largest shareholder with a 9% stake, behind the Chinese group HNA (29.5%) and Oceanwood (12%). The conditions presented by Castro were approved by NH’s Audit Committee, which is chaired by Koro Usarraga Unsain, and received unanimous support from NH’s Board of Directors, in which nine of the eleven members voted, given that neither Castro nor Francisco Javier Illa, who are representatives of Hesperia, participated in the negotiations.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Oceanwood: Supported By 42%+ Of NH’s Shareholders

16 June 2016 – Expansión

The investment fund Oceanwood is gaining support in NH in its crusade against the Chinese group HNA – the Spanish hotel chain’s majority shareholder with its 29.5% stake – and now has the backing of more than 42% of the shareholders, who will vote in favour of its proposals at the next General Shareholders’ Meeting scheduled to be held on 21 June.

Specifically, Oceanwood, with its 11% stake, will be supported by high profile shareholders such as Hesperia and Henderson, as well as other institutional investors, according to market sources.

At the Spanish chain’s next General Shareholder’ Meeting, a vote will be taken, at Oceanwood’s petition, regarding the departure of HNA’s four directors, including Charles Mobus – Co-Chairman of NH – due to a possible conflict of interest that has arisen as a result of the Chinese group’s recent purchase of Carlson.

The fund has proposed that Paul Johnson, Fernando Lacadena, María Grecna and José María Cantero de Montes-Jovellar take over from the Chinese directors. NH’s share price fell by 3.37% on the stock exchange yesterday, to €4.16 per share.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake

NH’s Shareholders Will Analyse Removal Of HNA’s Directors

26 May 2016 – Expansión

Oceanwood Capital, the fund that owns a 10% stake in the NH Hotel Group, has submitted a letter to the hotel company requesting that it adds some new items to the agenda for the General Shareholders’ Meeting, to be held on 21 June. It is requesting the removal of the four directors appointed by HNA, the Chinese company that owns a 29.5% stake in NH, i.e. the group’s majority shareholder.

Oceanwood believes that there is a clear conflict of interest that prevents those directors from defending the rights of all of the shareholders, rather than just those of the investment group that they represent. At the same time, Oceanwood has proposed the appointment of four external directors, because they cannot be classified as independent given that they have not been proposed by the appointments committee.

The document, which was submitted by due legal process yesterday, the last day on which it was legally admissible, requests the removal from the Board of the current Co-Chairman of the company, Charles Mobus, as well as of Ling Zhang, Xianyi Mu and Haibo Bai. The justification for these removals lies in the conflict of interst that now exists due to the structural and permanent competition between NH and its shareholder HNA, after the latter reached an agreement with Carlson Rezidor, a hotel group that competes directly with NH in Germany, the Netherlands and Benelux – particularly in Berlin, Brussels and Amsterdam – . Oceanwood asks not only that the General Shareholders’ Meeting removes these directors, but also that HNA is prevented from exercising its right to proportional representation as a result of its shareholding, until the aforementioned conflict of interest is eliminated.

In its request for the removal of the directors, Oceanwood emphasises, amongst other things, that the Chairman advised HNA on its purchase of Carlson Rezidor and that during that process, the possibility was proposed of the Chinese group submitting a takeover bid for 100% of NH. Moreover, it indicates that the three Chinese directors rarely attend board meetings in person, and instead choose to channel their votes through Mobus.

Support

In parallel to these removals, the fund, which hopes to have the support of other institutional investors to reach the 40% threshold, proposes the appointment of four new directors: Paul Johnson, Fernando Lacadena, María Grecna and José María Cantero de Montes-Jovellar. All are reputable professionals in their respective areas of activity. Johnson has worked in the hotel sector for 30 years, where he has created a chain, Kew Green Hotels, which has more than 5,000 beds and was recently sold to HK CTS for GBP 400 million.

Lacadena currently serves as the CEO of Testa – which has now been integrated into the Socimi Merlin – and, for several years before that, was the Finance Director at Sacyr. Meanwhile, Grecna has been the CEO of Värde Partners Europe and, between 2011 and 2013, was the CEO of the company in Iberia, headquartered in Madrid.

Finally, Cantero is a marketing specialist, who used to work at Amena (Orange) and who has worked for Mutua Madrileña for the last eight years, where he has served as the Deputy CEO. Oceanwood currently has one director on NH’s Board, Alfredo Fernandez Agras, and it asks that the General Shareholders’ Meeting ratifies his appointment. It says that there is no need to re-elect him, as it wants to prevent HNA from requesting the revocation of his appointment on the day of the General Shareholders’ Meeting.

Original story: Expansión (by S. Arancibia)

Translation: Carmel Drake