FCC’s ‘financial milestone’

01 April 2014

Juan Béjar, executive vice chairman and CEO of FCC, with Esther Alcocer Koplowitz, chairman

Global Spanish construction and infrastructure group FCC has completed the signing main refinancing contracts which began last year – the largest ever refinancing in Spain, and one of the biggest in Europe.

It involves replacing existing loans and credit facilities with a new long-term syndicated loan aligned with the goals of the group's strategic plan.

FCC is currently working on some of the world’s largest infrastructure and construction projects such as the Panama City Metro in Central America, which will be inaugurated this week. An FCC consortium will also start construction on lines 4, 5 and 6 of the Riyadh Metro in Saudi Arabia later this year.

The refinancing is described as a major milestone for FCC in its efforts to turn around the business. In early 2013, FCC’s new CEO, Juan Béjar, announced a strategic plan to return the company to growth. Since then, FCC has divested non-core assets to a value of over €1.5 billion.

Funds associated with Bill Gates (October 2013) and more recently George Soros (January 2014) have also invested in the company. FCC said the refinancing deal marked the successful closure of a process that would create the right conditions for FCC to move forward as a company.

The total amount of the refinancing is €4.51 billion, replacing the same amount of pre-existing debt in a number of structures, both syndicated and bilateral.

The financing will be in two parts. Tranche A, amounting to €3.16 billion, will be in the form of a mercantile loan, while Tranche B, at €1.35 billion, includes the right to convert into newly-issued shares at market price (without a discount) of the outstanding balance at maturity.

Four years from the completion date, such maturity may be extended up to six years at most in the event of conversion of Tranche B into FCC shares.

In Tranche A, €150 million will be repaid after 24 months, €175 million after 36 months, and the remainder at maturity.

FCC said the interest rate on Tranche A would be Euribor (the rate at which Euro interbank term deposits are being offered by one prime bank to another within the Economic Monetary Unit zone) plus a variable spread that rises with time – 3% in year one, 3.5% in year two, and 4% in years three and four.

The interest rate on Tranche B is Euribor, also plus a variable spread that rises with time – 11% in year one, 13% in year two, 15% in year three, and 16% in year four.

In the event of early repayment of Tranche B, the interest rate on the repaid portion will be reduced to 6% of the amount repaid in the year in which that occurs.

An agreement has also been reached with subsidiary Cementos Portland Valderrivas's credit banks to defer FCC's €200 million contingent capital contribution.