OHL Offers Bumper Discount in Share Sale to Reduce Borrowings

  • Spanish builder issues new shares to cut debt, fund growth
  • OHL shares plunge, bonds rise on capital increase plans

Spanish builder Obrascon Huarte Lain SA will issue new shares at a 62 percent discount to its last closing price to raise capital to reduce financing costs and fund expansion.

OHL will issue 199 million new shares at 5.02 euros apiece to raise 999.1 million euros ($1.12 billion), the Madrid-based construction firm and toll-road operator said in a filing to regulators Wednesday. Shares fell 7.3 percent to 12.19 euros at 9:29 a.m. in Madrid while its bonds rose.

OHL will use proceeds from the transaction to reduce debt and finance new concessions as part of a plan to double revenue by 2020. The company will channel 632.1 million euros of net proceeds of the share sale to reducing with-recourse debt and another 340.4 million euros into concessions, OHL said.

“It leaves them in a more comfortable situation but the dilution is very great,” said Javier Mielgo, an analyst at Mirabaud Securities in Madrid who has an “underweight” rating on the stock.

The price for the capital increase is a 35 percent discount to the theoretical ex-rights price of 7.73 euros, the builder said. The company’s 7.625 percent bonds, due in 2020, rose 1.5 cents to 100.5 cents on the euro, the highest for more than two months.

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