Isolux Said to Consider Proposal to Swap 70% of Debt for Equityby and
Creditors may get more than 90% of company under debt plan
Spanish builder’s advisers aim to conclude deal before summer
Grupo Isolux Corsan SA is planning to start talks with creditors over a proposal to swap about 70 percent of its debt into equity, according to two people with knowledge of the matter.
The Spanish construction and engineering company wants to cut debt to about 600 million euros ($678 million) from 2 billion euros, said the people who asked not to be identified because the matter is private. Under the plan, creditors would get at least 90 percent of Isolux in return for reducing debts and injecting at least 200 million euros of new money, they said.
Isolux hired financial advisers Houlihan Lokey Inc. and Rothschild as it struggles under debt built up through years of international expansion. The Madrid-based company has also failed in attempts to sell solar plants and Brazilian assets.
A spokeswoman for Isolux declined to comment on the restructuring plan.
“The intention is to engage with creditors over the next few weeks and launch a proposal to complete the deal this side of the summer,” Inigo Paneda, Rothschild’s Spanish head, said on an earnings call on Friday. Some banks have already provided some new money to pay suppliers and bond interest, he said.
The restructuring may include cash injections, extended maturities on some obligations and swapping part of the debt for equity or equity-like instruments, Paneda said, without giving specific details. Different types of creditors will get equitable treatment, he said.
Some holders of Isolux’s 850 million euros of April 2021 bonds have hired PJT Partners Inc. and Linklaters, according to Manuel Martinez Fidalgo, head of Spanish restructuring at Houlihan Lokey. Lenders are being advised by KPMG and Jones Day, he said on the earnings call.
Isolux is in exclusive talks about selling a transmission line in South America, Alejandra Lwoff, the company’s head of investor relations, said on the call. The builder completed the division of some assets previously co-owned with a Canadian pension fund earlier this month. Isolux has also started talks with minority shareholders in its T-Solar unit, which it has to buy out by the end of May, she said.
“Our current liquidity situation needs to be addressed,” Lwoff said. “The future of the group depends very much on the completion of the asset sales and the ongoing plan to recapitalize.”