Obrascon Huarte Lain SA, the Spanish builder facing a corruption scandal in Mexico fell as much as 13 percent in Madrid trading after announcing plans for a 1 billion-euro ($1.1 billion) capital increase.
OHL, as the construction company and toll-road operator is known, declined 12 percent to 15.12 euros as of 4:10 p.m. local time. Earlier it fell 13 percent, the biggest intradday drop since September 2001. The company’s bonds rallied at the prospect of it reducing its debt load.
The company said late Thursday that it plans to use the funds to reduce net debt by 650 million euros and to invest 350 million euros in new concessions. Shareholders will vote on the plan at a meeting Sept. 7 or 8.
OHL had to step in to increase guarantees on a loan taken out by one of its units, OHL Concesiones SA, in May after videos emerged on the Internet purporting to reveal executives of OHL Mexico SAB discussing ways to inflate toll rates, bribe judges and pay for a state official’s Christmas-week stay at a luxury Caribbean beach hotel. This month, the company said independent audits it commissioned found no evidence of wrongdoing.
Moody’s Investors Services placed OHL’s B1 credit rating on review for downgrade in May, citing a drop in the Mexican unit’s share price.
All the company’s notes jumped the most since they were issued. OHL’s 400 million euros of 4.75 percent securities maturing in March 2022 rose 5.7 cents on the euro to 91.9 cents, the most since their issuance, according to data compiled by Bloomberg. The bonds reached a record low of 78.5 cents last month.
Shareholder Villar Mir has committed to participate to own more than 50 percent of OHL after the sale, the company said.