Astaldi Family Said to Seek $83 Million to Uphold Majority Stake

  • Credit swaps signal 66% probability of default within a year
  • Italian builder stricken after writing down Venezuela losses

The family that controls Italian construction company Astaldi SpA is working to raise at least 70 million euros ($83 million) of additional funds that would help it uphold its stake following a share sale planned for next year, according to people familiar with the matter.

Saddled with a 230 million-euro writedown on receivables from Venezuela, Astaldi last week disclosed plans for a 200 million-euro capital increase and the sale of 200 million euros of new financial instruments. Delivering on that plan by the first quarter of next year could be challenging if its biggest shareholder fails to purchase shares that would maintain its stakeholding at 53 percent, said the people, who declined to be identified discussing non-public information.

The family’s participation is key for the capital increase to succeed, adding credence at a time when doubts are mounting on equity and bond markets about Astaldi’s ability to complete the fund-raising.

The Rome-based builder’s market capitalization slumped to as low as 200 million euros from 600 million euros at the beginning of November after the company made the Venezuelan writeoff public on Nov. 14. The South American country, one of the world’s riskiest, was declared in default on its sovereign debt the same day.

Credit-default swaps contracts on the company’s debt signaled a 66 percent probability of defaulting within a year, according to data provided by CMA. That’s up from a probability of 13 percent at the beginning of November.

The Astaldi family would have to contribute more than 100 million euros to avoid diluting its stakeholding, according to Bloomberg calculations. The investment vehicles that hold the shares had a combined 32 million euros of cash and cash equivalents on their balance sheets at the end of 2016, according to the last available public information from statements registered in Italy and Luxembourg in the summer.

Insufficient Cash

Astaldi said in a Nov. 14 statement that the company’s main shareholder expressed its support for the capital increase. The family holds 69 percent of the voting rights on the company’s stock, according to Astaldi’s website. 

While the holding companies don’t have sufficient cash to buy the additional shares, the family is considering options that would allow it to contribute at least 100 million euros to the share issue and avoid a dilution of ownership, said the people.

A spokeswoman for Astaldi declined to comment on the company’s plan. Chairman Paolo Astaldi, who also controls the two investment holdings, didn’t return emails and calls seeking comment.

The company is also considering issuing a new financial instrument which would have both a debt and an equity component worth about 200 million euros, the people said.

Convertible Notes

Their existing convertible notes issued in June are indicated at 42 cents on the euro, and yield almost 22 percent, according to data compiled by Bloomberg. As its shares hover near a 14-year low, Astaldi’s 750 million euros of bonds due December 2020 are quoted at a discount of about 35 percent of their face value, according to data compiled by Bloomberg.
Astaldi continues to have the backing of some of its largest lenders. Five of the 15 banks in its syndicate pool, representing about 50 percent of a 500 million-euro revolving credit facility, have agreed to waive a loan terms test scheduled for the end of the year, the people said. More than 66 percent of the banking syndicate pool needs to consent for the waiver to be effective, the people said.

The group of lenders -- Banco BPM SpA, BNP Paribas SA, HSBC Holdings Plc, Intesa Sanpaolo SpA and UniCredit SpA -- have also agreed to give Astaldi an additional credit line of 120 million euros, the company said in a statement last week.

Representatives for Intesa Sanpaolo, UniCredit, Banco BPM and HSBC declined to comment, while officials at BNP Paribas didn’t return emails seeking comment.

— With assistance by Chiara Remondini

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