Billionaire Carlos Slim’s Fomento de Construcciones y Contratas SA will start informal talks on Monday to refinance more than 3 billion euros ($3.35 billion) of loans, according to two people familiar with the matter.
The Spanish construction company, which is majority-owned by the world’s eighth richest person, wants to reduce interest costs and loosen terms governing its debt, said the people, who asked not to be identified because the talks are private. FCC’s lenders include Banco Bilbao Vizcaya Argentaria SA, CaixaBank SA and Banco Popular Espanol SA, the people said.
Julio Pastor, a spokesman for the company in Madrid, and officials at BBVA, CaixaBank and Banco Popular declined to comment on the talks.
FCC has two tranches of loans maturing in June 2018, called A and B, the people said. The 3 billion-euro tranche A pays as much as 400 basis points more than three-month euro benchmark rates, while the 131 million-euro tranche B pays 5 percent interest with more debt, according to the people. Tranche A loans are quoted between 90 cents and 93 cents on the euro, the people said.
The company is seeking to renegotiate terms governing the loans including those that limit its ability to invest in the business, the people said. FCC has cut debt since Mexico’s Slim became its biggest shareholder through an investment in 2014. Slim now owns 61 percent of the company through his financing vehicle, Inversora Carso, according to a July filing of the Spanish market regulator.
“The banks are refinancing a much stronger company now,” said Javier Mielgo, an analyst at Mirabaud in Madrid. “The position of the group is very different and they want to translate that into the position of the syndicated loan.”