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FCC announces Special Shareholders' Meeting to increase capital by 1 billion euro

19/10/2014

FCC announces Special Shareholders' Meeting to increase capital by 1 billion euro

  • The decision will have a major impact on reducing debt
  • The reduction in interest expenses will also improve the bottom line
  • The Board thanked the majority shareholder, Esther Koplowitz, for her contribution to enabling the Group to restructure its funding

 

FCC announces Special Shareholders' Meeting to increase capital by 1 billion euro

At a special meeting this afternoon, the Board of Directors of FCC resolved to refer to a Special Shareholders' Meeting a proposal to perform a rights issue amounting to 1,000 million euro. The funds will be used mainly to make early repayment of the B tranche under the refinancing agreement in force since 26 June last.

The Board decision, which was unanimous, is intended to strengthen the Group's capital structure and reduce its indebtedness. By notably reducing the interest burden, the rights issue will also have a significant impact on the bottom line.

Juan Béjar, CEO of FCC, stated that "these benefits will accelerate attainment of the goals established in the Strategic Plan which management has been implementing since March 2013; they include attaining leverage of four times EBITDA, increasing EBITDA to 1.1 billion euro, and generating 850 million euro in cash flow".

The proceeds from the rights issue will be used basically to make early repayment of the B tranche under the agreement to refinance the bulk of the bank debt that was signed in March this year and came into force in June. The agreement refers to 4.512 billion euro in debt, structured in two tranches: 3.162 billion euro and 1.350 billion euro. Although it does not represent a cash outflow, the second tranche incurs interest at 11% in the first year, which is capitalised at the end of the period if the loan is not repaid beforehand.

In the event of early repayment, the financing contract provides for a reduction in the interest rate applicable to the repaid amounts from 11% to 6% in the year of repayment.

The transaction will also enable the Group to meet commitments to contribute lesser amounts of funds to subsidiaries, which will also reduce consolidated debt. The effect on leverage will be combined with that deriving from the divestment plan, which has already contributed 1.8 billion euro of the targeted 2.2 billion euro.

The rights issue and its conditions will be submitted for approval by a special Shareholders' Meeting to be held on 20 November at first call. This is a key milestone in the process of transforming FCC, the Citizen Services Group, which commenced one-and-a-half years ago.

The Board thanked the majority shareholder, Esther Koplowitz, for her contribution to enabling the Group to restructure its funding.