NH’s Minority Shareholders Fear HNA Will Take Control

19 May 2015 – Expansión

Intesa’s exit from the share capital increases HNA and Hesperia’s control over NH – six of the hotel chain’s eleven directors are representives of the two largest stakeholders.

The funds and minority shareholders of the NH Hotel Group have expressed their concern following a decision by the Board of Directors not to appoint any more independent directors and therefore increase, albeit indirectly, the control exerted by the Chinese giant HNA and the Hesperia Investor Group – the two largest shareholders.

At the end of January, Intesa Sanpaolo put an end to its eight year investment in NH by selling its 7.6% stake. At the time, the Italian entity had just one director (Livio Giovanni Maria Torio) since its other representative (Rosalba Casiraghi) resigned in December 2014; her exit left NH without any female directors and granted HNA its fourth executive.

Following Intesa’s divestment, NH’s Board of Directors decreased from 13 to 11 members. And so it will remain for the time being. Last week, the management body approved the accounts for the first quarter. It also referred the appointment of Francisco Román and Ling Zhang (appointed by co-optation) and the re-election of José Antonio Castro and José María López-Elola (following the expiry of their mandates) for approval by the General Shareholders’ Meeting, which will be held in June. There was no mention of (the appointment of any) more independent directors, which has aroused concern amongst NH’s fund managers and minority shareholders, since the hotel chain’s corporate bylaws provide for a maximum of 20 directors and a minimum of five.

Over the last few years, funds such as THS, BlackRock, Fidelity and Invesco have all acquired shares in NH, although in most cases, their stakes, which fluctuate constantly, are currently trading at below 3%. Currently, four of the eleven directors represent HNA and Hesperia has two directors, even though it has reduced its stake by 8.56% to 9.09%.

Corporate governance

The counterweight are three independent directors, together with the CEO, Federico González and the Chairman, Rodrigo Echenique, who represents Santander and whose exit from NH is expected in the medium term. The concern of the minority shareholders is that, as well as violating corporate governance standards, HNA, which owns a 29.5% stake, will strengthen its hold over NH without launching a public takeover bid (OPA) for the company. If the CNMV establishes that NHA and Hesperia control NH between them, it may compel them to launch a takeover bid for 100% of the share capital.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake

Axiare Closes Accelerated Placement Ahead Of Its Capital Increase

18 May 2015 – Expansión

The Socimi has just closed an accelerated placement with investors ahead of its capital increase.

The listed real estate investment company (Socimi) Axiare Patrimonio wants to maintain the speed of investment that has enabled it to disburse €460 million since its IPO last summer. To this end, the company has announced a capital increase of €394 million, with the aim of doubling its share capital.

Last week, the Socimi led by Luis López de Herrera Oria launched a brochure containing the details of the transaction, which would involve the issue of around 35.87 million new shares, at a nominal value of ten euros per share, plus a premium of one euro (per share).

The capital increase will have preferential subscription rights. The Socimi’s shareholders include funds such as T. Rowe Price and Taube Hodson, and Citigroup.

Axiare owns assets worth €507.95 million, including office buildings in Madrid and logistics warehouses in Guadalajara (pictured above). During the first quarter of 2015, the Socimi generated revenues of €7.59 million and a profit of €2.32 million.


Ahead of this capital increase, Axiare closed an accelerated placement of the shares of one of its largest shareholders, Perry Capital, on Friday. The objective of this placement was to provide greater liquidity for the company’s stock.

The placement of 3.5 million shares (representing 9.721% of its share capital) was closed in record time (one hour) and with a slight issue premium (€12 per share). Buyers of these shares included institutional investment funds from the US, Britain and Norway, according to sources at the company.

The subscription rights for these shares will begin trading on 20 May, whilst the shares themselves will begin trading on 10 June. On Friday, Axiare’s share price closed down 0.29% on the stock exchange at €11.94 per share.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Cohen & Steers Increase Stake In Hispania To 5%

5 May 2015 – Expansión

The US fund Cohen & Steers has increased its stake in Hispania to 5% after participating in the €323 million capital increase conducted by the real estate company last week. Hispania’s other shareholders include John Paulson and George Soros.

Original story: Expansión

Translation: Carmel Drake

Vinci Park In Exclusive Negotiations To Buy Empark For €900M

23 April 2015 – Expansión

Exclusivity / The group controlled by Ardian will purchase the parking space market leader, which has debt of €500 million.

Yesterday, the French company Vinci Park (controlled by the fund Ardian, together with Credit Agricole and Vinci) announced that it had begun exclusive negotiations with the shareholders of Empark regarding the “potential purchase” of the market leading parking space company in Spain and Portugal, which is controlled by Portuguese shareholders. “We are still negotiating to arrive at a final agreement” say sources at Vinci Park. The company is committed to maintaining an investment grade rating.

A few days ago, Empark’s shareholders said that an agreement with Vinci was imminent for the sale of a controlling stake.

Financial troubles

Other investors have expressed interest in Empark, valued at around €900 million (including debt of €500 million), including the Spanish businessman Eugenio Hinojosa who, with the support of several financial institutions, including Santander, designed a purchase offer to compete against the bid made by the French group. Empark will have to explain the transaction to its bondholders in London.

Assips is Empark’s controlling shareholder, with a 50.3% stake – the vehicle is controlled by the Portuguese firm A. Silva & Silva, which is in turn controlled by the founding families of the company who participate in the management of the group.

The top executives at Empark, which manages 500,000 parking spaces in Spain, Portugal, UK and Turkey, are José Augusto Tavares (Chairman), Pedro Mendes (CEO) and Antonio Moura.

The remaining capital is divided amongst several investment funds managed by BES (22%) and Ahorro Corporación (8.2%). The Mello family holds a 2.6% stake. These shareholders will also sell (their stakes) to Vinci Park.

Other movements

The controlling shareholders commissioned JPMorgan and Caixa Banco de Investimento (CBI) to search for a buyer in 2014. One of the reasons for exiting the company (which they acquired from Ferrovial in 2008) has been the financial troubles of the Portuguese shareholders, which have been going through a complicated bankruptcy process and have had to deal with debt maturities in recent months.

Empark recorded sales of €180 million in 2013 and a gross operating profit (EBITDA) of €63.3 million. During the first three months of 2014, Empark recorded turnover of €42.8 million, down 0.6% (on the previous year) and a gross profit of €15.3 million, in line with 2013. Vinci Park, which has operated in Spain since 1994, manages 39 car parks in various cities across the country. The company also has a presence in a further thirteen countries and generates total revenues of €704 million.

The sale of Empark coincides with the decision by KKR, Torreal and ProA to sell 49% of Saba.

Original story: Expansión (by C.Morán and D.Badía)

Translation: Carmel Drake

Slim Would Keep Realia On The Stock Exchange And Support A Return To Dividends

18 March 2015 – Expansión

Slim has formally announced his offer to the CNMV / The Mexican investor’s counter-bid amounts to €0.58 per share, i.e. 18% higher than Hispania’s offer. He has now guaranteed control of the real estate company through FCC and the 25% stake he intends to purchase from Bankia.

Yesterday, Carlos Slim confirmed his plan to take control of Realia through his property company Carso, by confirming to the CNMV his counter-bid for the real estate company at €0.58 per share, whereby valuing the company at €186.6 million. The offer by the Mexican business tycoon, who is the majority shareholder in FCC, is 18% higher than the bid authorised by Hispania (€0.49 per share).

The two bids are well below Realia’s value on the stock exchange; its share price closed yesterday at €0.71 (having increased by 3.6%), therefore, unless there are improvements in either of the competing takeover bids, neither will receive backing from the shareholders.

But that factor is not important for Slim, since, in practice, he is already guaranteed control of the company, thanks to an agreement (he has made) to purchase the 24.9% stake held by Bankia in Realia for €44.5 million (€0.58 per share or the best price that arises from the takeover bids). With this percentage, plus the 37% indirect stake he holds through FCC, Slim will own 62% of Realia.

Shareholder agreement

Proof of the robustness of the plan set out by Slim is that his counter-bid is not conditional upon any percentage approval by the shareholders; it only requires that the agreement to purchase Bankia’s shares comes to fruition.

In the note that he sent to the CNMV yesterday, Slim ‘gave a strong signal’ to the shareholders of Realia that they should continue in the company and, therefore, not accept his offer. Carso’s objective, as well as to ensure that Realia continues trading on the stock market, is to “clean up Realia, increase its revenues and reduce its expenses, in order to undertake an active dividend distribution policy over the long term, to the extent that Realia’s financial circumstances allow it”. Through these dividends, Slim is seeking to increase Realia’s appeal to its minority shareholders, which have not received any (dividend) returns on their shares since 2008.

The only weakness in the Mexican investor’s offer is the possible reaction of the opportunistic funds that bought the majority of Realia’s debt. Specifically, Hispania signed an exclusivity agreement with Fortress, King Street and Goldman Sachs before it launched its takeover bid, whereby it committed to purchasing half of their liabilities at a discount of 21%.

The three funds hold €793 million of Realia’s total debt balance of €1,097 million. These loans, which were sold (to the funds) by Sareb, Santander and CaixaBank last year, are due to mature soon: on 30 June 2016. When the funds agreed to purchase the debt, they agreed with Realia that, in the event of a change of ownership of more than 30%, the whole amount (of the debt purchased) would have to be repaid “immediately” with one exception: the successful takeover of the company by Hispania.

The exclusivity agreement between the Socimi owned by George Soros and Realia’s funds expires after seven months, which means that Slim and these credtiors will not be able to reach any agreement until 21 September.

Despite this hurdle, sources close to the Mexican investor indicate that it will not prevent him from taking control of Realia. Firstly because there are serious doubts that more than 30% of the shareholders will agree to Slim’s takeover bid, which falls 18% below Realia’s listed share price. In addition, the same sources point out that Realia holds €450 million in cash, which it could use to repay some of its liabilities. The remaining debt could be exchanged for real estate assets owned by Realia.

Hispania has also lowered its expectations in terms of Realia. It would settle for a “financial stake” of less than 30%. Nor should an agreement between Slim and Hispania be ruled out.

Original story: Expansión (by C. Morán)

Translation: Carmel Drake

BBVA & Ortega Will Need To Reach An Agreement To Sell Occidental Hoteles

9 March 2015 – Expansión

BBVA is the primary shareholder in Occidental. Through a number of investment companies, the bank controls 57.53% of the chain.

Amancio Ortega, the owner of Inditex, holds a 23.62% stake through his investment company Partler 2006. The other shareholders together control less than 20%.

The shareholders of Occidental Hoteles return to the market in search of a buyer, after the transaction with Barceló failed in December. Disagreements over price will be key to the divestment. (…). The investor duo, which together own more than 81% of the company, are again looking for a replacement. (…).


In 2007, the partners acquired Occidental from Mercapital and La Caixa for €700 million, including a debt of €229.5 million. The owners planned to invest €340 million to grow the chain and convert it into a world leader in the leisure segment, but that was suspended due to the economic crisis.

Over time, Occidental became a non-strategic investment and after restructuring the business and refinancing its debt in 2013, BBVA and Ortega launched a process to sell their stakes at the beginning of last year. (…)

According to sector sources, BBVA and Ortega were trying to sell at a price in line with what they paid eight years ago, however the offers they received included discounts of between 40% and 50%, given the investment required in Occidental’s hotels. At the last minute, an agreement with Barceló and CPG fell through; according to terms of the alliance between the two parties, the fund was going to assume the financial outlay and Barceló was going to take over the management of the hotels.

Given the situation, the shareholders of Occidental decided to suspend the process, although they are now resuming their search for candidates. And that is where the discrepancies arise over how to execute the divestment.

Ortega, who put an end to his adventure with the NH Hotel Group a year ago, is keen to accelerate his exit from Occidental, whose value may well decrease over the medium term, since there is no plan in place to allow it to keep growing. Meanwhile, BBVA is more reluctant and has put a (price) limit below which it is not willing to divest. Both investors have signed an agreement, which means that they will study any offers they receive.

The problem is that sooner or later, they will have to reach a consensus, since an agreement exists between the shareholders that links the approval of agreements in meetings to a favourable vote of at least 51% of the voting rights of Occidental.

Moreover, on an exceptional basis, for matters such as the appointment of the chairman, a minimum quorum of 66% is required. (…)

The hotel chain has now started to modernise its portfolio, which includes 13 hotels, most of which it owns. In recent years, Occidental has significantly reduced its portfolio – when BBVA and Ortega acquired their stakes, the group had 80 hotels and 18,500 rooms.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Slim Negotiates A Deal With Hispania To Take Control Of Realia

6 March 2015 – Expansión

ALLIANCE / The businessman is building bridges with the Socimi, which has an agreement in place with the group’s creditors to restructure its debt. Slim may transfer some assets or engage the management of the real estate company to his rival.

The takeover war being fought between Hispania Real and Carlos Slim’s real estate company Carso, for the control of Realia may end with the waving of a white flag. On Wednesday, the Mexican businessman announced his acquisition of a 24.953% stake in Realia’s share capital from Bankia and “in addition” that he would be launching a takeover bid for 100% of the company’s shares at a price of €0.58/share.

The businessman’s offer exceeded the one made by the Socimi in November for €0.49 per share, by 18%. That takeover bid is still pending approval by the CNMV.

In his favour, Slim’s offer does not only win on price. The Mexican businessman is also the largest shareholder in FCC, which in turn owns a 36.9% stake in Realia. After Slim joined the construction group, FCC announced in February that it would be suspending the sale of its stake.


Nevertheless, Hispania still has an ace up its sleeve. The Socimi created by Azora’s managers, Fernando Gumuzio and Concha Osácar made an agreement with Fortress, King Street and Goldman Sachs before launching the takeover bid. The three funds have lent €793 million of the total debt (€1,097 million) held by Realia. Those loans, sold by Sareb, Santander and CaixaBank last year, are due to mature soon: on 30 June 2016. Moreover, when the funds agreed to purchase the debt, they also agreed with Realia that, in the event of a change in more than 30% of the shareholders, then the whole debt amount would have to be repaid “immediately”.

On 21 November, Hispania made an agreement with the creditors in which the funds agreed not to exercise their shares and not to demand the full repayment of the financing that would result from the application of the change of control clause. In exchange, Hispania purchased 50% of the receivables that each one of the funds possessed, at a discount of 21%. This partnership makes Slim’s assault on the real estate company more difficult, and so the Mexican has not wasted any time building bridges with his competitor.

The main obstacle facing Slim is that Hispania and the funds agreed an exclusivity period of seven months for the execution of the agreements, extendable up to ten months if a competing offer were presented. “During that exclusivity period, neither of the parties may initiate, encourage, lead, trigger, conduct or respond to any offer, proposal, contact, conversation, negotiation or approximation of any kind, with or from any third party, regarding the implementation of any operation that may be similar or incompatible with the execution of transfer of the loans resulting from the financing to Hispania Real”, says the agreement. This means that Slim and the funds may not make any agreement until 21 September without taking Hispania into account.

Against this background, the Mexican businessman has chosen to forge an alliance with his rival, to reduce this period. In exchange, according to close sources, Slim is offering the Socimi some capital, some assets to increase its own equity or the opportunity to participate in Realia as its manager. Inmobiliaria Carso, the vehicle that Slim wants to use to acquire Realia, does not have either the structure or the knowledge of the Spanish market held by Hispania’s managers, and therefore a deal between the two cannot be ruled out.


The prior agreement with Hispania places the creditor funds in an advantageous situation in the context of the new offer. In the event that the Socimi does decide to raise the price of its takeover bid, Fortress, King Street and Goldman Sachs would receive €38.25 million more for 50% of their debt. If, on the other hand, the Socimi decides to withdraw from the process, the funds shall pay Hispania €5 million “provided that the rights of creditors’ loans have satisfied the nominal”.

Original story: Expansión (by R. Ruiz, D. Badía and C. Morán)

Translation: Carmel Drake

Eroski To Resume Expansion And Open 100 Supermarkets Per Year

20 February 2015 – Deia

The supermarket chain will invest €400 million over 4 years.

The retail distribution group Eroski (….) is planning to open one hundred new supermarkets per year – primarily in the north of the Iberian Peninsular – over the next four years. During this period, the Basque group, chaired by Agustín Markaide, expects to invest around €400 million, according to the strategic plan presented by the cooperative group to its shareholders yesterday in an extraordinary shareholders meeting held at the BEC in Barakaldo.

The Chairman of Eroski presented the proposed updates to the Strategic Plan 2013-2016 to the 500 shareholders present, once the definitive agreement for the refinancing of its bank debt has been agreed and stated that “it is time to look to the future, to progress more quickly with the expansion of our new ‘Contigo’ or ‘With you’ campaign and to recover investments to strengthen our most strategic businesses to create a new, more profitable Eroski”.

This more competitive Eroski has focused on its traditional markets in Euskadi, Galicia, Cataluña and the Balearic Islands, as well as in its respective hinterlands. It has also promoted the formula of franchised stores to recover market share lost as a result of the divestments that it has been forced to undertake in Spain to finance its debt payments.

One of Eroski’s key commitments in this new phase is that of extending its ‘Contigo’ commercial model to more than 200 stores under the second part of its Strategic Plan 2013-2016, by opening and refurbishing premises. According to Eroski executives, the reason for this approach is the success that has been obtained through the ‘Contigo’ campaign in all of the locations in which it has been implemented. It currently operates in 66 stores and its results show “a very positive response from consumers, with a 9% increase in sales in supermarkets and a 6% increase in the fully refurbished hypermarkets”. This improvement in sales has exceeded double digits in the case of fresh produce.

In terms of the (more than) one hundred stores per year that Eroski is planning to open over the next few years, a mix of owned stores and franchises is envisaged. The franchise formula will be used in the markets in Andalucía, Extremadura, Madrid and Levante, regions where the group, which has its headquarters in Elorrio, will open shops with a surface area of between 300 m2 and 500 m2.

Another one of its key commitment involves energy saving. The Basque group plans to open the first energetically self-sufficient supermarket in Europe, measuring 2,000 square metres in Gasteiz in 2016, which will be powered using renewable energy sources.


Original story: Deia (by Xabier Aja)

Translation: Carmel Drake

Sacyr Seeks Investors To Inject €300m Into Testa

4 February 2015 – Expansión

Operation Accordion / The construction company will receive contributions from its subsidiary amounting to €1,180 million, as the preliminary step in the placement of up to 30% of its capital with institutional investors.

Yesterday, in a whirlwind shareholders meeting, Sacyr gave the go ahead for Testa, its real estate management company, to carry out a significant internal restructuring with the dual-objective of enabling it to pay multi-million debts to its parent and at the same time, strengthening its balance sheet from the inflow of funds through a capital increase on the stock market.

Specifically, Testa’s shareholders renewed the mandate to the Board of Directors (led by Fernando Lacadena, the new CEO, who replaced Daniel Loureda) to conduct an operation to return €1,197 million to its shareholders through an extraordinary dividend payment of €527 million and a reduction in capital of €669 million, within the next year.

Sacyr will be the main beneficiary since it controls 99.3% of Testa’s share capital. This operation is subject to a simultaneous capital increase, to allow Testa to reconstruct its balance sheet through an IPO, which has a minimum target of €300 million.


The two operations are closely linked, which is why Sacyr has taken its time to sound out the market and determine the level of investor interest in Testa. The intention of the group, chaired by Manuel Manrique, is to carry out a placement through an IPO aimed at institutional investors. In parallel, Sacyr also plans to divest some of its stake, although how much it will relinquish has still to be determined. In any case, the construction company wants to retain its role as the controlling shareholder, and so its stake after the sale will not fall below 70%.


Testa’s shares closed trading yesterday at €19.30 per share, after a strong rise of 7.3%. The company’s market capitalisation amounts to €2,230 million, which means that at current market prices, the sale of a 25% stake would generate income of €550 million.

In a second phase, Sacyr’s objective is to convert Testa into a Socimi (a real estate company that pays out 85% of its profits in dividends). This new type of company, which benefits from significant tax exemptions, has attracted interest from reputed investors such as George Soros, John Paulson and large funds, including Pimco.

For Testa, the new Socimi structure would have the advantage of starting out with a large, ready-made portfolio of assets, which generated turnover of more than €140 million during the first nine months of 2014.

According to the latest appraisal data published by the CNMV, the market value of Testa’s properties amounts to €3,287 million, which would make it the largest Socimi in the country by asset value. Currently, Merlin Properties is the largest Socimi, with assets valued at more than €1,276 million.

This year, we also expect to see the IPO of Bulwin, the Socimi created by the listed company Quabit. The historical real estate company GMP has also changed its structure to a Socimi.

Original story: Expansión (by C. Morán and R. Ruíz)

Translation: Carmel Drake