Spain’s Fergo Aisa to Become Profitable by Abandoning Homeland
Fergo Aisa SA (AISA), the Spanish real estate developer that reported losses for the past four years, said it will return to profit in 2012 as the company abandons Spain to focus on Latin America and the Middle East.
“This year we’ll finish an absolute cleanup of our real estate losses and next year we’ll post a profit,” Chairman and Chief Executive Officer Carlos Fernandez said in a telephone interview from the company’s Barcelona headquarters yesterday.
Fergo Aisa, which has taken 280 million euros ($372 million) in write downs related to losses on Spanish property assets over the past two years, is building state-owned housing in countries including Colombia, Iraq and Morocco. Non-Spanish contracts will account for around 95 percent of its business, Fernandez said.
The company jumped 56 percent in Madrid trading two days ago, the most since at least 1999, after saying it won a 450 million-euro contract to build 20,000 homes in city of Cucuta in Colombia. Fergo Aisa may still post a loss this year because of property write downs, Fernandez said.
“In the next few weeks we’ll announce contracts in Abu Dhabi and Iraq that are bigger than the one we announced in Colombia,” Fernandez, 52, said. “We’re talking from 25,000 to 50,000 units.
Colombia’s economy is set to grow 4.5 percent in 2012, while Iraq’s may climb 12.6 percent and Morocco’s 4.6 percent, dwarfing estimates for Spanish growth of 1.1 percent, according to the International Monetary Fund.
The company has pledged to pay down almost half of its 418 million euros of debt owed to 35 banks including Banco Santander SA (SAN), Spain’s biggest lender, Bankia SA, Caja de Ahorros del Mediterraneo (CAM) and Banco Popular Espanol SA (POP), with proceeds from the contracts. The company will probably carry out a 50-million- euro share sale in coming months, Fernandez said.
A closely held Venezuelan oil company will subscribe to 25 million euros of new shares in December and a further 25 million euros in January, Fernandez said. He declined to name the investor.
Fergo Aisa aims to sell assets in coming weeks valued at more than 50 million euros, he said.