Economy / Companies.- El Corte Inglés shareholder crisis hinders access to capital markets

The family struggle could lead to postpone the bond issue and influence the decision of the Qatari Sheikh to expand its participation

The family struggle could lead to postpone the bond issue and influence the decision of the Qatari Sheikh to expand its participation


The family struggle could lead to postpone the bond issue and influence the decision of the Qatari Sheikh to expand its participation

The English Court faces an adverse scenario to make the issuance of debt for up to 1,200 million euros initially planned for June or July due to the uncertainty of the shareholding that crosses, pending continuity as president of Dimas Gimeno.

Market sources consulted by Europa Press have pointed out that the context of the shareholder dispute that the department store group is living “is not the best” to go to the capital market and issue debt and estimate that, if the conflict is not resolved, said issue could be delayed until after the shareholders meeting, foreseeably with a new president, which will take place at the end of August.

As explained, the shareholder instability that the group is going through and the absence of a short-term solution generates distrust among investors in a context in which the interest rates of this issue would be higher.

Despite this, the same sources have pointed out that it is a financially and financially sound company, not having over-indebtedness and having a large portfolio of assets while highlighting that the accounts are sound.

The only thing that has happened, they explain, is that El Corte Inglés has left the ‘road map’ marked by circumstances beyond its own activity, but has other alternatives such as the divestment of some assets.

In fact, the group’s net debt remained at the end of its 2016 fiscal year in line with that of 2015, which was around 3,834 million euros.

At the beginning of the year, El Corte Inglés signed a financing agreement for its debt for a maximum amount of 3,650 million euros, with which it reduced costs, increased terms and eliminated guarantees.

Specifically, the distribution giant reached an agreement with the entities Banco Santander, Bank of America Merrill Lynch and Goldman Sachs that contemplated a bridge loan of 1,200 million euros at twelve months and with two extension options, until an expiration maximum of two years; a loan of 1,450 million euros, for a term of five years, and a line of credit of up to 1,000 million euros, for a term of five years.

As explained by the group, the agreement guaranteed long-term stable financing (an increase of almost two years in the average maturity of its debt), with lower costs (a significant reduction in its average annual financial cost) and without the need for guarantees.

The funds obtained through this contract were going to be used to replace the syndicated loan of November 2013, whose outstanding balance reached 2,153 million, as well as to reorder the promissory note program whose outstanding balance amounted to 1,315 million euros.

Among the options the group is considering to replace the bridge loan with medium and long-term financing, it is necessary to go to the $$$





The company has convened its board of directors at the end of May with the question of whether the resignation of Gimeno at the head of the presidency will be on the table, a position for which Manuel Pizarro could even have been tested. the margin of the conflict with the Qatari sheikh, so the helm of the company could pass into the hands of Marta Alvarez, according to the same sources.

However, the shareholder uncertainty could also jeopardize the decision of the former prime minister of Qatar, Sheikh Hamad Bin Jassim Bin Jaber Al Thani, who entered the shareholding of El Corte Ingles with the purchase of 10% of the capital by 1,000 million a through a loan, to increase their participation, the same sources point out.

The Qatari investor is expected to hold more than 12% of the capital next July if he capitalizes the interest on the loan, a percentage that could even reach approximately 14% depending on the evolution of the company, although the current situation of the group It can influence your decision.


The up to now head of El Corte Inglés remains firm in his decision not to leave office, despite the pulse he has with his cousins Marta and Cristina Álvarez, who hold 69% of the IASA Securities Portfolio, which in turn, owns 22.18% of the distribution giant, whose first shareholder is the Ramón Areces Foundation, with 37.39% of capital and where the sisters also have an important weight as patrons.

In this scenario, also splashed by lawsuits, both parties try to scratch the maximum possible support within the council, although, according to the sources consulted, the balance is tipped in favor of the daughters of Isidoro Álvarez, since they would have, among others, the support for most of the directors, including the CEOs Víctor del Pozo and Jesús Nuño de la Rosa.

The English Court closed its last fiscal year, between March 2016 and February 2017, with an increase of 2.4% of its net profit, up to 161.86 million euros, which chained three consecutive years of growth, while the gross operating result (Ebitda) soared 7.5% to reach 981 million euros.