ICA to Avoid Further Downgrades in ‘Tough Year,’ CEO SaysJose Enrique Arrioja and Brendan Case
Empresas ICA SAB, the Mexican construction company seeking to raise cash to cut debt, will avoid additional credit downgrades by selling completed projects and boosting building activity, Chief Executive Officer Alonso Quintana said.
Delays in existing projects and a slower-than-expected start for new public-works spending under President Enrique Pena Nieto have led to a “tough year,” Quintana said at the Bloomberg Mexico Conference in New York. The Mexico City-based company has announced about $600 million in asset sales in the last month, following ratings downgrades in May by Moody’s Investors Service and Standard & Poor’s.
“I’m sure we will be generating enough cash soon enough to really balance the debt ratio,” Quintana said. “We will be selling some mature assets to go into the other projects, and that’s how we get our return.”
Accelerated construction activity on roads and other projects will help ICA boost 2013 revenue from last year’s level even after a 27 percent first-quarter decline, Quintana said. The company is optimistic that Pena Nieto will win approval for an overhaul of energy laws that will bolster spending in oil and gas, in addition to potential outlays on highways, railroads and other building projects.
ICA climbed 0.4 percent to 23.45 pesos at the close in Mexico City.
ICA is likely to generate revenue of 39 billion pesos ($3 billion) this year, according to analysts surveyed by Bloomberg, a 4.3 percent increase from last year. ICA had sales of 37.4 billion pesos in 2012, the company said in May after restating information based on accounting changes adopted this year.
“We’re still aiming for higher revenues than last year,” Quintana said. “Everything is in place now to really start moving the country through the investment in infrastructure.”
The builder said yesterday it would raise $185.7 million by selling part of its stake in airport operator Grupo Aeroportuario del Centro Norte SAB. The deal may generate another $27.8 million if underwriters exercise an option to buy additional shares.
ICA announced the sale of its holdings in tollway operator Red de Carreteras de Occidente last month to majority owner Goldman Sachs Group Inc., raising an expected 5.07 billion pesos ($392 million). ICA had 12.35 billion pesos in debt due within a year and 8.56 billion pesos in cash and equivalents as of March 31, it said April 26.
ICA is expanding in Latin American countries including Colombia, Costa Rica and Peru, Quintana said. It’s also holding talks about partnerships and potential acquisitions with companies in the U.S., where it expects increases in infrastructure spending, Quintana said.
The U.S. negotiations may be completed as early as this year, he said.
“We are talking to a few companies, whether it be a partnership structure or directly buying someone,” he said. “We see that the infrastructure is deteriorating and that there’s going to be very big investments.”