Spanish builder FCC shares leap on reports of Soros stake buy

Fri Dec 27, 2013 10:21am EST

* Press reports say Soros follows Gates in FCC stake buy

* FCC still in refinancing talks on 5 bln euros debt

* Shares lead Spanish blue-chip gainers

By Sonya Dowsett

MADRID, Dec 27 (Reuters) - Shares in debt-laden Spanish builder FCC rose by as much as 8.8 percent on Friday on press reports that billionaire financier George Soros had bought a 3 percent stake from the group's founding family.

This would be the second high-profile purchase in FCC by a foreign investor this year after Microsoft founder Bill Gates bought 6 percent in October.

FCC declined to comment. Soros Fund Management was not reachable for comment.

Foreign investors have started to buy assets in Spain as prices come down after a long recession and an international bail-out of the banking system last year.

In the past few months, for example, Santander bank has sold its real estate management business to U.S. private equity group Apollo Global Management while Mexican investors have taken stakes in meat processor Campofrio and shipbuilder Barreras.

"The FCC buy is a long-term bet on a Spanish recovery," said Jose Lizan, fund manager at Auriga Global Investors who does not own FCC shares. "FCC was one of the worst hit by the crisis. This is a case of investing to stay put for 6 or 7 years."

Loss-making FCC has cut staff, put assets like real estate division Realia up for sale and made big writedowns on its renewable energy business and its insolvent Austrian construction company Alpine to cut debt.

FCC said the founding Koplowitz family sold 3.8 percent of its controlling stake in FCC for 72 million euros ($98.59 million) to reduce personal debt, but maintained just over 50 percent of the company. FCC did not disclose the buyer.

The stock had not traded for two days because Spanish markets were closed on Dec. 25 and Dec. 26 for Christmas holidays. The shares jumped 8.8 percent on Friday morning to 17 euros. They later retraced and were up 3.1 percent by 1429 GMT, leading Spain's blue-chip gainers.

Shares in FCC, exposed to some of the sectors worst hit by Spain's economic downturn such as public works, real estate and renewable energy, have lost around 80 percent of their value since their 2007 peak at the height of the Spanish housing boom.

At the time of Bill Gates' investment in FCC, one senior Madrid-based banker had questioned the wisdom of buying into a company whose future is closely linked to its ability to tackle huge borrowings. Net debt stood at 6.6 billion euros at end-September - more than three times its market valuation.

"I'm surprised at that investment because there are smarter ways to invest in FCC, through their debt for example, rather than through the equity with the debt on the top," the banker said.

FCC is in talks with 37 banks to refinance around 5 billion euros of debt. The company has reached an agreement with the six Spanish banks that hold the majority of the debt, a source close to the talks said, but wants to continue talks in order to get as many banks as possible on board. FCC declined to comment.

Under a new Spanish law passed earlier this year, refinancing terms can be forced through if 75 percent of syndicate banks agree terms with a borrower.

FCC last week said it had refinanced 381 million pounds ($625.85 million) of debt at its British waste management company WRG until December 2017, one of the milestones in the refinancing process.

Analysts welcomed the step as a move towards reaching the agreement on the refinancing of the rest of the debt. They also said net debt would still remain too high and cash flow would be low given FCC's core businesses like building and services are heavily exposed to Spain's weak economy.