“We know that the last few years have been hard,” explains Rosa Isabel Aza, president of the Board of Directors of Duro Felguera (DF). The company, with 162 years of history and headquartered in Asturias, is immersed in a crisis that has dragged on since 2018 and that, with the coronavirus, has accelerated to the brink of bankruptcy.
Still, DF fights to stay afloat. “We are convinced that we are a viable company that can continue to spearhead innovation in Asturian and national industry,” adds the president in the statement addressed to the staff.
Duro Felguera proposes a new industrial plan, which involves the leap to the renewable energy and smart systems sectors, while awaiting the imminent entry of public capital as part of this financial and forced restructuring. Or as the only option to survive. The ransom: 100 million euros.
A convulsive stage
In the midst of negotiations with the Sociedad Estatal de Participaciones Industriales (SEPI) and after a hectic summer trying to save the engineering group, Aza has confirmed that DF will carry out a capital increase in 2023 to return the temporary rescue requested on August 25 , as reported by the company to the National Securities Market Commission (CNMV).
Of the 100 million from the SEPI Strategic Companies Solvency Support Fund, 30 million correspond to a capital increase and 70 million to a participating loan. “We have no alternative but to take advantage of the Support Fund, without giving up the option of incorporating new private investors,” Aza explained in the statement. The goal: to achieve sales of 623 million by 2025 and an EBITDA of 48 million. Figures that would allow it to pay off the bank debt (85 million) and abandon the crisis that has plagued the company since 2018.
The company, specialized in the execution of ‘turnkey’ projects and provision of services in the areas of energy, mining, industrial and oil & gas, has undergone a total reconversion process since then. At the top of the board, it began in December 2018 with the appointment of José María Orihuela as CEO and ended this week with the replacement of the secretary of the board of directors, Secundido Felgueroso, by Bernardo Gutiérrez de la Roza.
The loss of confidence in the financial markets and the difficulty in obtaining contracts led Duro Felguera to restructure its financial debt in 2018, in addition to a simultaneous capital increase that would be insufficient in the absence of the signing of the line of guarantees. That same year an ERE of 110 people was announced, which the company finally resigned, but since then there have been selective dismissals. In 2019 it recovered the path of profits, with a liquidity surplus of 22.9 million euros and an increase of 30% in contracts, in contrast to the losses of more than 3.5 million deficit of the previous year.
In turn, “DF has claims with clients for a value of 244 million euros that have not yet been recorded in the financial statements,” say company sources, who expect most of these claims to be favorable to it.
Flight of investors, stoppage of works, fall of projects or difficulty in fulfilling contracts. Like the vast majority of the engineering giants, the crisis generated by COVID-19 hit Duro Felguera hard, thus truncating this attempt to surface. SEPI’s Solvency Support Fund for Strategic Companies now appears as a lifeline amid the swell that hits this key corporation for the Asturian economy.
For the good of DF, for the good of Asturias
“Duro Felguera is a strategic company for Asturias”, as stated by the presidents of the Chambers of Commerce of Avilés, Gijón and Oviedo. Luis Noguera, Félix Baragaño and José Suárez, signed a joint statement in the newspaper last Sunday Trade giving its support to the company, which represents 1.8% of GDP and 1.5% of total employment in the Principality, according to data from a study recently published by the University of Oviedo on its impact on Asturias.
In addition to its contribution to employment, generating 2,483 direct, indirect or induced jobs, the study highlights the pull or pull effect of DF on the regional economic activity as a whole. “Both as a supplier of final products or intermediate factors to other companies, as a consumer of goods and services from other production units for their own industrial process,” says the report.
“The participation of SEPI is the only option to achieve the continuity of the company”, defend the presidents of the Chambers of Commerce of Asturias before the difficult situation that the company is experiencing. “We support this operation to be completed as soon as possible with the determined help of all, for the good of the company and, of course, for the good of Asturias”, they conclude.
To the rescue
“We are trying to lay the foundations for a new Duro Felguera, innovative, with the capacity to once again change its center of activity towards the needs that are currently emerging in the market,” says the Chairman of the Board of Directors.
SEPI has an ammunition of 10 billion euros to save strategic companies affected by COVID-19 and Duro Felguera could be one of them. The state company has a period of six months to decide, but DF does not have that long. Some sources indicate that the company would have threatened to present an ERE of more than 200 people if it does not get oxygen to respond to the pressure from the banks.
This rescue of 100 million that DF is requesting implies a capital increase of 30 million and a participative loan of 70, so the state would have a significant participation of more than 40% of the company.
The need to have a fluid articulation with the Public Administration has led the company to sign for its Board of Directors two former socialist ministers, Valeriano Gómez and Jordi Sevilla, and a former PP minister, Elena Pisonero.
Within this viability plan, Aza highlights that, once reasonable hiring levels and financial stability have been reached, this capital increase would be carried out by 2023, with the entry of private investors for an amount of 60 million. In this way, the participative loan would be paid off, reducing SEPI’s participation in the capital of Duro Felguera.
Reinvent yourself or die
Assembly, maintenance and disassembly of thermal power plants, heavy boilermaking projects, manufacture of tanks and spheres or projects of mining and handling. In addition to the traditional businesses to which the entity has been linked, DF intends to attack new sectors, as the base trend of its strategic plan. The date: until 2025. The figure: reach 623 million euros in sales.
According to sources at the firm, this plan cannot yet be shared, until its approval at the shareholders’ meeting to be held in the coming weeks. This “turn” will lead you to green energies. DF has already made progress in the creation of a new subsidiary specialized in renewables, DF Green Tech. For its development, it is working on the expansion of the “Tallerón”, located in the port of El Musel de Gijón. In this strategic location they will manufacture the structures for the offshore wind energy systems. Ultimately, they will manufacture windmills for the high seas.
The industrial plan also includes the positioning of the company in projects and services in different areas, such as thermosolar energy, biomass and renewable H2, as well as the renewal of the commitment to intelligent security systems.
In this field, Duro Felguera already has the subsidiary EPICOM, a leader in encrypted communication for the military sphere, but is already working on developing a new parallel division for the civil sphere, “where it is increasingly necessary”, as the president maintains . The sectors: telecommunications, financial or energy.
“We need to have guarantees for the entry of new investors and it is the state that can give them to us,” say sources from Duro Felguera. The company awaits the arrival of temporary support from the state while negotiating with possible private investors to ease the conditions of the aid.
Several businessmen have come to the fore showing their intention to join the company. This was the statement to elDiario.es Blas Herrero, owner of the Kiss FM radio station, one of the great Spanish fortunes, who admitted his possible entry into Duro Felguera: “I am interested, I continue to see the issue and we have made many approaches, but there is still nothing concrete regarding a direct purchase. We have to wait a bit to see how the situation is defined in September.”
The Domínguez de Gor family, owner of Mayoral, which already entered the capital increase in 2018, could be interested in doing it again this year, according to financial sources. At the moment, they have liquidated their participation in DF, which faces an uncertain future conditioned by the rescue of the state and by the impact of COVID-19, which has paralyzed the approval of large projects.
Even so, DF has just signed a contract with the Canadian company Catena Carbon Industries to carry out the necessary engineering in different facilities in Canada. This agreement has been added to the one reached at the end of August with the mining company Sigma Lithium, for the Grota do Cirilio project, in Brazil.
“Our goal is to get the necessary support to keep Duro Felguera as we know it, but focused on its most profitable activities and taking advantage of all its experience to grow in new business niches”, concludes President Rosa Isabel Aza.