Shares in Spain's FCC soar after Bill Gates takes 6 percent stake

MADRID Tue Oct 22, 2013 6:08am EDT

Bill Gates attends the Millennium Development Goals event on the sidelines of the United Nations General Assembly at the U.N. Headquarters in New York September 25, 2013. REUTERS/Brendan McDermid

Bill Gates attends the Millennium Development Goals event on the sidelines of the United Nations General Assembly at the U.N. Headquarters in New York September 25, 2013.

Credit: Reuters/Brendan McDermid

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MADRID (Reuters) - Shares in Spanish builder FCC (FCC.MC) surged 13 percent to an 18-month high on Tuesday after the company announced late on Monday that Bill Gates, co-founder of Microsoft (MSFT.O), had become its second largest shareholder.

The debt-laden construction company said after market close on Monday that Gates had bought 6 percent of the firm for 113.5 million euros ($155 million) at Friday's closing price of 14.9 euros per share.

The purchase is welcome news for the firm, which is fighting to overhaul its business and return to profit after a construction and property crash that slashed its share price by around 80 percent.

Gates's FCC share purchase was splashed across the front pages of national newspapers on Tuesday and was hailed by some as a resurgence of interest in Spain, which is expected to emerge from recession this quarter.

The purchase makes Gates the second biggest shareholder after chairwoman Esther Koplowitz, one of Spain's wealthiest individuals and a philanthropist, like Gates.

The shares had jumped 5 percent on Monday before the announcement, which came after the market closed, and were leading Spain's blue-chip index in morning trade, up 10 percent at 17.30 euros at 0950 GMT, off an earlier high at 17.75, while the IBEX 35 index .IBEX was largely flat.

"A long-term investment by an investor of the caliber of Bill Gates is much more important than the short-term effect it may have upon the shares," chief executive Juan Bejar said in an interview with Cadena Ser radio.

Analysts cautioned that, although the purchase was positive for FCC, its most pressing issue was negotiations with creditor banks to refinance around 5 billion euros of debt that falls due this year and next.

"We continue to be worried about the likely terms of the refinancing, not only the cost of debt but also for the guarantees, covenants and debt reduction calendar, as we fear that banks will leave management little flexibility to create value for shareholders," said broker Espirito Santo in a research note.

FCC has cut staff, put assets on the block and made heavy writedowns on bad investments in renewable energy and Austria in an attempt to turn around its business.

Meanwhile, it has turned its focus onto big construction concessions, especially abroad, and won a multibillion euro contract in July to build a metro in the Saudi Arabian capital, Riyadh.

($1 = 0.7312 euros)

(Additional reporting by Tracy Rucinski, Sarah Morris and Andres Gonzalez; Editing by Kevin Liffey)

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