The management and shareholders of OHL have not had a quiet day in recent months. After the two days of storm on the Stock Exchange, as a result of the presentation of the historical losses last Wednesday, the action was going through profit lands until today Moody's has given bad news about the group controlled by the Villar Mir family. The agency has lowered the rating and the unsecured senior debt of OHL from B3 to Caa1.
The grade go down one step, within the junk bond, going from high credit risk to very high risk. With the ad still hot, from OHL a value has been "Loose liquidity" that provides "the necessary stability to execute the business plan". After the divestment in the concession business, OHL amortized 700 million financial debt, leaving it practically at zero in the first semester, and it was made with 1.046 million that they place in 345 million net cash position.
"OHL's liquidity is still adequate, but it has deteriorated in the last two quarters," Moody's said. The net cash was 617 million at the end of June, down to the aforementioned 345 million in just three months.
It is doubtful now if OHL is able to maintain and raise new guarantees to feed its construction business, before what the company tries to reassure by revealing that maintains negotiations with banks "to continue guaranteeing guarantees and credit lines."
OHL came from losing more than 840 million in the first half of the year, but has still given a new negative surprise to the market in the third quarter: the sanitation of 20% of the portfolio. Of the 5.1 billion in the booking of contracts, a fifth I was going to throw losses in the future, which has motivated the recognition of them so as not to affect the margin from now on.
After the aforementioned reorganization, for that portion of the toxic portfolio, a margin of 0% is recorded and for the rest, 7% is expected, with the average remaining at around 6.5%. The 520 million in works committed by Aleatica (formerly OHL Concessions) are still to be accounted for in the portfolio, but each one of the projects will be examined and could be rejected. avoid new works that contain losses.
In this context, Moody's has referred to "significantly negative" results in the third quarter and underlines the forecast for the fourth quarter of a negative cash flow of 300 million euros.
Alarm over more than 600 million in bonds
The one of the reduction of qualification is everything a touch of attention to the bondholders. The group that presides Juan Villar-Mir maintains 666 million in bonds with expirations in 2020, 2022 and 2023. In this regard, the message that leaves the company highlights the "convenience" of the maturity calendar.
With losses exceeding 1,300 million at the end of the third quarter and a stock market crash that has led to the action well below the euro, OHL's new management has embarked on a profound restructuring with the objective of to regain the benefit in 2020.
The structure costs must fall to 160 million per year already in 2019, 30% lower than the 240 million in 2017. And the company will still try to new adjustment of 25% to put them at 120 million.
The estimate for 2020 places sales in a range of 2,500 to 3,000 million; the gross margin in the portfolio should be 8%, the EBITDA will offer a margin of 5%, and the structure costs have to be contained at 4%. It is expected that the CEO, José Antonio Fernández Gallar, present in the first quarter of the new year an update of the strategic plan.