April 18 (Bloomberg) -- Iberdrola SA and Actividades de Construccion & Servicios SA were the worst performers on Spain’s benchmark stock index today after ACS sold a 3.69 percent stake in Spain’s biggest power company to cut debt.
Iberdrola fell as much as 7.7 percent, the biggest intraday drop since May 2010, and was down 6.7 percent to 3.64 euros as of 11:42 a.m. in Madrid. ACS, a builder, sank as much as 7.2 percent, the steepest intraday loss since February 2011.
ACS sold 220.52 million shares of Iberdrola at 3.62 euros a share, the Madrid-based company said in a statement today. That’s 7.2 percent less than yesterday’s closing stock price. The sale will cut 540 million euros ($707 million) off earnings, it said, adding it expects to compensate the loss with capital gains from other asset sales.
“This is a clear setback for ACS because even as it’s selling non-core assets, which is good to boost capital structure, it will have to report a big capital loss,” Nuria Alvarez, a Madrid-based analyst at Renta 4, said today by phone. “The timing of the transaction is really bad.”
ACS, which still holds a 14.85 percent stake in Iberdrola after the sale, said it will use the 800 million euros obtained to cut debt and boost its finances.
“The placement comes sooner than we thought,” Javier Garrido, an analyst at JPMorgan based in Madrid, wrote in a report sent to investors today before the price of the deal was announced. “Both timing and size of the sale suggest that ACS has been a forced seller of the stake, either to help cover the margin calls of the loans taken to buy the stake in Iberdrola or to help pay other debt maturities in the group.”
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