Mexican billionaire Carlos Slim has taken control of Spanish construction and infrastructure group FCC, having agreed a deal with B 1998, the company through which Esther Koplowitz previously held 50.02% of the company.
Slim was at one point regarded as the richest person in the world, and the deal was made through Control Empresarial de Capitales SA de CV, which belongs to his family.
A €1 billion increase in equity at FCC, with new shares subscribed at a price of €7.5 per share, has been approved by its board – equal to 133,269,083 new shares.
FCC said the pre-emptive subscription rights to which current shareholders are entitled would start to take effect once the Spanish National Securities Market Commission (Comisión Nacional del Mercado de Valores, CNMV) had approved the documents relating to the issue. The subscription ratio means 41 current shares entitles the holder to subscribe 43 new shares.
The operation is underwritten by Banco Santander, JP Morgan and Morgan Stanley.
Approval by the FCC board came after B 1998 agreed the deal with Control Empresarial de Capitales SA de CV. This involved the sale of its subscription rights in the capital increase, which was equal to half.
The capital increase was said by FCC to represent the culmination of its financial and operational stabilisation process and the start of a new phase focusing on operational profitability and renewed growth, particularly for its environment and water businesses.
With the funds attained through the capital increase, FCC said it hoped to bolster its equity situation, reduce its debt and improve its results by substantially reducing its financial burdens.
These funds would make it possible to pay off part of what is known as Tranche B of the refinancing agreement in effect since 23 June. This represents a total of €1.39 billion. It accrues interest at a rising rate (from 11% to 16%) and is convertible in shares after a period of four years if it has not been paid off or refinanced.
FCC said it planned to allocate €765 million to the repayment of this tranche, which would settle €900 million after applying a 15% write-off already agreed with the main creditors. The remaining funds would be allocated to Cementos Portland Valderrivas (€100 million), FCC Environment (€100 million) and expenses incurred in the issue process.
The interest rate on the remaining €490 million of Tranche B (€450 million in principal plus €40 million of capitalised interest) will be reduced from an average of 13.5% to 5%, resulting in a reduction of €160 million in interest. FCC said the sum of the profits arising from application of the funds and the restructuring of Tranche B equated to a creation of value of €2.3 per share.
FCC – Fomento de Constucciones y Contratas – was founded in 1992 following the merger of Construcciones y Contratas and Fomento de Obras y Construcciones (FOCSA). Construcciones y Contratas was started in 1944, while FOCSA was formed in 1900.
Esther Koplowitz, often said to be the wealthiest woman in Spain, is the daughter of the founder of FCC. The board of directors of FCC is chaired by her daughter, Esther Alcocer Koplowitz.
A 78% reduction in losses was reported by FCC earlier this year