The Spanish government has come under pressure in recent weeks over the possible sale of up to 29.9 per cent of Repsol, the oil group, to Lukoil of Russia.

Politicians of all hues fear a deal could lead to a foreign takeover bid for the company and deprive Spain of its only integrated energy group.

However, the government’s discomfort over the issue pales beside the financial problems of Sacyr Vallehermoso, the heavily indebted Spanish construction group whose search for a buyer for its 20 per cent Repsol stake triggered the drama.

The company, led by chairman Luis del Rivero, is accustomed to controversy. In 2005, it tried to muscle its way on to the board of BBVA after accumulating a stake of less than 5 per cent in Spain’s second biggest bank. After this sortie failed, it launched a similar raid on Eiffage, a French rival, but this time with a 33 per cent equity stake. Its foray into Spain’s energy sector – which now threatens its viability – came amid a simmering battle for board seats in Paris that was to end in defeat for Sacyr.

Bought at the end of 2006, at the top of a market inflated by merger and acquisition activity, the Repsol holding is today worth less than 60 per cent of the €6.5bn paid by Sacyr. As the stake itself was used as collateral against an original €5.2bn bank credit, this decline has forced the company to pledge another asset – rental property business Testa – to lenders to avoid breaching loan covenants.

On December 28, the terms become tougher: a margin call currently triggered when Repsol’s shares trade for more than three days below €21.90 will kick in at €24. With global stock market weakness set to continue, and Testa’s net asset value under pressure from declining real estate prices, Sacyr could be forced to inject further assets into the Repsol holding subsidiary.

However, of the two other businesses that could have qualified as collateral under the original loan agreement, one – the Eiffage stake – has since been sold.

The other is toll road operator Itínere. However, Sacyr’s failure to float 35 per cent of the business in April this year means it has not qualified.

Sacyr is now trying to sell Itínere to raise cash, but negotiations, already snagged on price, have been shifted to the back burner. Meanwhile, its residential development business “is probably cash flow negative”, according to one sector analyst. Although up to date on servicing total debt of €18.55bn ($23.53bn), Sacyr will have to refinance just over €2bn of this next year, when the Spanish economy is tipped to contract by as much as 2 per cent.

The sale of the Repsol stake, with enough of a premium to break even on the original investment, would take some of the immediate pressure off the company and its creditors. Among the latter is La Caixa, the Catalan savings bank that is both exposed to Sacyr and interested in selling part of its own 12.5 per cent stake in Repsol to raise liquidity. In recent weeks, it has assumed the role of lead negotiator between creditor banks and suitors such as Lukoil.

However, the bank is having second thoughts as the political controversy around Lukoil’s possible involvement upstages the real financial crisis at Sacyr.

“People are starting to forget what this is all about,” says a lawyer involved in the stake sale. “And that is the viability of Sacyr Vallehermoso.”

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