Tag: redundancies

Día Engages PwC to Handle the Sale of 300 Supermarkets

22 February 2019 – Idealista

Día is looking for solutions to cushion the impact of its business plan, which forecasts the elimination of up to 2,100 jobs, by selling off its premises. The company has engaged PwC to look for a buyer or buyers for as many stores as possible of the 300 that it plans to close this year.

Día is going to present an Employment Regulation File to the company’s unions, which has already been announced will affect a maximum of 2,100 employees, all in Spain. To minimise the redundancies, the company wants to get rid of the property that it is hoarding in a large number of locations across the country and raise all of the funds that it can.

Most of the dismissals that Día is planning will be concentrated amongst staff in the stores that are going to be closed, in such a way that, to the extent that interested parties can be found to acquire those establishments, they will try to reach an agreement with them to absorb the workforce, or at least, some of it.

Día is whereby returning to PwC after entrusting the firm with a similar task to divest its cash & carry business, Max Descuento, for which it expects to receive almost €50 million.

The Big Four firm, which is making contact with industrial companies interested in acquiring this business, will propose acquiring the stores in batches. Día expects to have closed all of its divestments by the middle of this year.

Original story: Idealista 

Translation: Carmel Drake

ECI Sells 40% Of Torre Serrano To Infinorsa For €50M

14 September 2017 – Expansión

El Corte Inglés has sold 40% of the company Iberiafon, owner of the Torre Serrano building in Madrid, to the real estate company Infinorsa for €50 million, according to sources at the distribution giant.

The firm that has acquired the property, which is owned by several European funds, already owned 60% of Iberiafon’s share capital and also owns other buildings in Madrid, such as Torre Europa.

This operation, which forms part of the distribution group’s divestment plan, effectively assigns a value of €125 million for 100% of the property. The building’s current tenants include the Masaveu Group and the firms GVC Gaesco and Beka Finance, amongst others.

Located at number 47 on one of the most exclusive shopping arteries in Madrid, next to the El Corte Inglés department store on Calle Serrano, the tower has 13 floors, which have a combined surface area of 20,000 m2, including a 5,700 m2 car park.

Half of the total space is used for offices, whilst the shopping area occupies 4,300 m2, which will continue to be leased to the group chaired by Dimas Gimeno, according to the press release.

El Corte Inglés closed its last tax year, from March 2016 to February 2017, with a 2.4% increase in its net profit, to €161.86 million. That saw the group record three consecutive years of growth, whilst the gross operating profit (EBITDA) soared by 7.5%, to reach €981 million, according to the distribution giant.

Specifically, the profit, the highest in the last three years, has been affected by €178 million relating to “disengagement plan”, which has affected 1,341 people.

Original story: Expansión

Translation: Carmel Drake

Spain’s Banks Recover But Its Toxic Assets Remain

9 January 2017 – Tribune

Hit by a severe crisis several years ago, Spain’s banking sector has recovered but at a cost as thousands are laid off and it struggles to get rid of toxic assets.

“The system is closer to putting most of the crisis legacies behind it,” said analysts at the International Monetary Fund in charge of Spain in a recent report. Still, the ghosts of a crisis that saw the European Union bail out the sector have recently been revived as Italy suffers a similar predicament, with the State having to rescue Monte dei Paschi di Siena, the world’s oldest bank.

The EU lent €41 billion ($43 billion) to rescue the Spanish banking sector in the spring of 2012, compared to some €50 billion in Greece, as an example.

At the time, Spain was waist-deep in a financial crisis caused when a property bubble burst in 2008, after years of euphoria that saw loans granted almost blindly to households incapable of reimbursing them.

Since then, though, the share of problem loans on the balance sheets of Spain’s banks has dropped considerably.

In the second quarter of 2016, it stood at an average of 6%, according to the European Banking Authority (EBA) regulatory agency. This is slightly above the European median of 5.4%, but well below that of Italy, Portugal or Greece, which stand at 16.4%, 20% and 47% respectively.

Spain’s central bank, which is even stricter in its calculations of the share of bad loans, said in November that it stood at an average of 9.2%, against a high of 13.6% at the end of 2013. The Moody’s ratings agency predicts this should continue to drop thanks to “favourable macroeconomic conditions” such as expected growth of 3.2% in 2016, double the eurozone average.

Banks are also much stricter in granting loans now.

But on a darker note, they are struggling to sell the huge amount of property seized during the crisis from households that could not pay, as buyers remain scarce.

“Despite the mild recovery in the housing market observed in 2015, banks’ real estate repossessions continue to exceed the volume of properties that banks are managing to sell,” said Moody’s in a note.

Original story: Tribune

Edited by: Carmel Drake

Fortress Is Preparing For Another ERE At Geslico

12 February 2015 – El Confidencial

Fortress, the alternative investment fund that bought the savings banks’ financing business, has announced to its employees that is it going to undertake a statutory redundancy procedure (un expediente de regulación de empleo or ERE) at Geslico, the subsidiary dedicated to loan recovery. Although the US entity has not quantified how many people will be affected by the drastic measure, sources close to the firm say that almost 40% of the workforce could be made redundant.

Geslico, the group formed by three subsidiaries with headquarters in Madrid, Valencia and Zaragoza, currently employs 450 people, of which around 200 could be made redundant as a result of the ERE. Although Fortress has not yet explained the real reasons for adopting this measure, sources close to the company explain the that job cuts are due to the loss of business resulting from the mergers of savings banks.

The announcement was made at Paratus, the business centre created by Fortress in Barcelona to manage all of the acquisitions the fund has made in Spain since it started to buy non-performing loans from financial institutions such as Banco Santander and debt from the real estate company Realia. Subsequently, between 2012 and 2013, Fortress acquired Lico Leasing, the holding company that provides financing to companies in the Spanish Confederation of Savings Banks (Confederación Española de Cajas de Ahorros or CECA), and Geslico, which it bought for almost €220 million.

Nevertheless, the name Fortress gained notoriety in Spain when the fund tried to sell 300 homes it had bought from Sareb, at a much higher price than the State’s bad bank had agreed to transfer them to a group of individuals.

These types of funds, known as opportunistic or vulture funds, have become the new owners of mountains of unpaid debt – estimated to amount to €50,000 million – which originated from the balance sheets of Spanish banks and was transferred for a price significantly below its face value. Subsequently, these funds manage the debts by trying to negotiate long-term payment plans with the borrowers to recover the initial amounts loaned.

The ERE at Geslico is not the first to be proposed by Fortress, which already significantly reduced Geslico’s workforce, at the end of 2013. At that time, Paratus informed its employees that 174 of the 470 strong workforce were going to be made redundant, with their contracts terminated. Another 40 were told that their employment contracts would be suspended temporarily (una suspensión temporal de empleo or ERTE), which was to result in 210 employees losing their jobs on a permanent or temporary basis. In the end, following internal negotiations, the list of redundancies was reduced to 120 people.

Prior to this, in 2012, the shareholders of Lico Corporation, which included BBVA, Banco Sabadell, Mapfre, Ibercaja, Unicaja, CECA, Novagalicia, CatalunyaCaixa and Bankia, amongst others, had already announced a redundancy procedure, which affected 95 of the 230 employees at the financing company.

In the most recent annual report filed by Fortress, the fund claimed that it had “confidence in the robust future of Geslico’s activity, due to its broad range of clients and the trend towards outsourcing debt recovery work”. Nevertheless, it warned in its forecast for 2014 that “annual recoveries may decline slightly with respect to 2013, as a result of the restructuring of the banking sector and the reduction in lending in recent years”. The reality has proven to be worse than expected and Geslico’s employees are paying the price.

Original story: El Confidencial (by Agustín Marco)

Translation: Carmel Drake