September 21, 2020

The Amodio feel the support of the bank to OHL before deciding their entry with 29% | Companies

The Mexican family that is preparing to lead the capital of OHL, headed by the brothers Luis and Mauricio Amodio, has been launched to test the Spanish banking and different international entities to know the degree of real financial support that has the construction of the Villar Mir and, above all, if the usual entities of OHL would be willing to support her in the new stage. Some conversations that can condition the maximum input operation when Fitch downgraded the credit rating of the construction group last month from B + to CCC +, which already implies a risk of possible default.

The help sought is in the form of guarantees, fundamental in the circulatory system of any construction company. OHL would be having serious limitations to attend competitions due to the exhaustion of its lines, and the potential first shareholders want to ensure that the company will have fuel to qualify for new tenders and to renew its work portfolio (4,951 million euros at the end of the first half). Without endorsements, hiring is stalled and that circumstance would make investors fold candles.

The potential first shareholder wants to make sure that the construction company will have financial support to tender

The Amodium, argue financial sources, have hired the services of KPMG to perform this survey and undertake the landing in the capital foreseeably with 29% of OHL, which would prevent the launch of an opa. That package is valued at 82.3 million euros at market prices.

With experience in the Mexican construction market, through Caabsa group, the new investor is essentially targeting two entities Santander and CaixaBank. The first one, the sources consulted, is the one that has been most reluctant to open the hand to new guarantees as the OHL crisis has worsened. Further, Bankia, Sabadell, Société Général, and Crédit Agricole They are also among the group's leading guarantors.

The Amodio brothers and their team have contacted the OHL management, with which they dissected the company activity by activity. After that, they have outlined a business plan with which they are addressing the banks.

The potential new owner would also have asked for details on the risk management policy in hiring, in view of the millionaire provisions for failed contracts in Qatar, Turkey, Canada or Algeria, among other markets. In this regard, OHL has constituted a hiring committee to put the magnifying glass on the projects and avoid participation in those who can compromise the profitability of the conglomerate.

The new investors, with their own business plan for OHL, focus on convincing La Caixa and Santander

The entry operation

OHL confirmed on October 23 the existence of negotiations between its first shareholder, Villar Mir Group (33.3%), and the Amodio family for the latter's entry into the capital. Despite ensuring that there was still no binding agreement, OHL itself anticipated that it would accommodate the new first shareholder through a capital increase by a maximum of 20%, in which the preemptive subscription right will be excluded.

Together with this operation, with which the Amodium would reach 16.6% of OHL's expanded capital (taking into account the dilution effect), Villar Mir Group would sell them around 13%. With that, the founder Juan Miguel Villar Mir would keep 20% of the company waiting for an eventual comeback of the price, in the hands of the new direction of the company, to be able to sell later more expensive. This capital increase, which would come from the hand of the firm decision of the Amodio to take over OHL, must be submitted for approval at a general meeting of shareholders.

The company that runs José Antonio Fernández Gallar has achieved oxygen this year, bottle to bottle, with the extension of the line of guarantees for 313 million that it uses to contract in Spain and the rest of Europe. The group of entities granted a first micro-term from June to September, and subsequently a green light has been given to a new four-month extension ending at the end of January. OHL, advised by JP Morgan, would have sought to expand the figure to 500 million.

In the environment of the conversations it is ensured that the bank pressure It is being of high intensity in recent weeks in search of accelerating the change in ownership of the listed construction company.

Already last August the CNMV questioned OHL about how it would reach 3,000 million hiring planned in 2019 from the little more than 1,500 million achieved at the end of the first semester, 23% more than a year earlier. It was then that management revealed to the regulator that it was in negotiations to expand the aforementioned line, that OHL is covered with a deposit of 140 million.

This financing to provide guarantees in bidding processes is part of a global capacity in guarantees of 3,500 million, of which some 2,000 million are active in America.

A line of downward guarantees and strong guarantees

The CEO of OHL, José Antonio Fernández Gallar, and the president of the group, Juan Villar-Mir de Fuentes.

The CEO of OHL, José Antonio Fernández Gallar, and the president of the group, Juan Villar-Mir de Fuentes.

Control by the bank. The credit known in OHL as Multi-Product Syndicated Financing was signed on December 30, 2016 and included a line of guarantees (464.5 million) and another line of confirming (95 million). At the end of March 2017, a first innovation took place and financing limits were extended, adding a revolving loan of 190 million. In subsequent negotiations, with OHL already touched by rating reductions, revolving financing was canceled, as was the confirmation line. The line of guarantees, meanwhile, was reduced to 313.7 million. The temporary extensions of it are now offered for quarters and in June of this year OHL was forced to guarantee those guarantees with the deposit of 140 million in guarantee (17% of the cash and liquid assets available).

Perimeter reduction. After the divestment in the Concessions area and the sale of a good part of the assets of OHL Desarrollos, the group chaired by Juan Villar-Mir focuses on the construction of civil works and building, industrial engineering and real estate services. It also tries to set up a new division to participate in the concession business, including the construction of infrastructure (greenfield projects), with minority stakes alongside financial profile investors.

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