FCC Said to Plan Cement Unit Rescue Funds for Debt PaymentKatie Linsell
Fomento de Construcciones & Contratas SA, the Spanish builder that counts Bill Gates and George Soros among investors, will help its cement unit make a debt payment by transferring rescue funds, according to four people familiar with the matter.
FCC got approval from creditors to give as much as 20 million euros ($26 million) to Cementos Portland Valderrivas SA, which must pay lenders 50 million euros on Sept. 30, said the people, who asked not to be identified because they’re not authorized to speak about it.
Meeting the payment deadline will buy more time for Cementos Portland to restructure about 1 billion euros of loans with creditors including Apollo Global Management LLC and Blackstone Group LP’s GSO Capital Partners LP. Lenders to Spain’s biggest cement maker granted a payment delay in June when the Pamplona-based company didn’t have the cash.
It “doesn’t mean the company has averted its debt problems,” Nicolas Lopez, head of analysis at Madrid-based broker MG Valores, said in a telephone interview. “We don’t expect a major improvement of the cement market to help the company generate enough cash to service its debt.”
A Madrid-based Cementos Portland spokesman declined to comment on the cash transfer and debt payment.
Cementos Portland has reported losses for three straight years as cement demand in Spain fell to the lowest since the 1960s following the collapse of the nation’s real-estate market, triggering the worst recession in five decades. Cement consumption dropped 80 percent since the height of the property market boom in 2007, according to data compiled by the Spanish Cement Association.
FCC has its own debt problems as the company seeks to cancel a 1.35 billion-euro loan that was put in place as a stop-gap measure this year as part of an almost 5 billion-euro restructuring. The Barcelona-based company, which gets most of its earnings from environmental services like waste management, has hired banks to co-ordinate a capital increase to repay the debt.