Fomento de Construcciones y Contratas SA, the Spanish builder that counts Bill Gates among its investors, is on track to meet its 2014 earnings target, Chief Executive Officer Juan Bejar said.
FCC plans to increase its earnings before interest, taxes, depreciation and amortization by 20 percent this year, the Barcelona-based company said Feb. 28. That’s equivalent to an Ebitda of about 864 million euros ($1.18 billion) up from 720 million euros at the end of last year.
“We are ahead of that target, but still it’s early in the year,” said Bejar, who has focused on reorganizing the company since he was named CEO in January 2013. “We are moving from restructuring mode to focusing on profitability.”
FCC, which said April 1 it reached an agreement with lenders to refinance 4.5 billion euros of debt in a new structure and calendar of repayments, is relying on the expansion of its environmental and water units overseas, and the selective growth of its international construction unit, Bejar said in a June 18 interview.
“About 60 percent of my executives’ time is on profitability,” said Bejar. “Another 20 percent is for following up the cost-cutting plan, which is well advanced, and the remainder is for growth opportunities.”
The company has several milestones to meet with lenders after its refinancing. At a meeting in Barcelona today, FCC shareholders approved the issuance of warrants to lenders of 1.35 billion euros of payment-in-kind debt.
Lenders include Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, according to a filing submitted to equity holders. The warrants can be exercised for new FCC equity after four years if the debt is outstanding, the filing shows.
The PIK debt, which allows borrowers to roll up interest so that it’s paid when the debt comes due, will pay interest of 11 percent more than the euro interbank offered rate in the first year, 13 percent in the second year, 15 percent in the third year, and 16 percent in the last one. The warrants and the cost of the debt create an incentive for the existing shareholders to bolster FCC equity and repay the loan as early as possible.
FCC is controlled by investor Esther Koplowitz via the billionaire’s B-1998 holding company. Billionaire George Soros is in talks with Koplowitz to inject funds into B-1998, El Confidencial reported June 12.
Bejar declined to comment on the existence or evolution of such talks.
Shareholders also approved the extension of 450 million euros of convertible bonds to 2020 and the reduction of the conversion price from 37.85 euros a share to 30 euros a share.