Bankrupt Spanish developer refinances debt

11th March 2011, Comments 0 comments

Spanish property developer Martinsa Fadesa, which filed for credit protection three years ago, said Friday it had reached a deal to refinance its debt despite the continuing difficulties in the country's real estate sector.

"The judge of the mercantile court in (the northwestern city of) La Coruna agreed to the deal this morning (Friday) for Martinsa Fadesa and its five subsidiaries," the company said in a statement.

The deal "has the support of more than 73 percent of creditors" in the group.

In July 2008, Martinsa Fadesa filed for adminstration, saying it had insufficient cashflow to meet interest payments and pay suppliers, becoming the first major victim of the property crisis in Spain.

After about a decade of booming activity, Spain's property sector collapsed in 2008 amid rising interest rates, oversupply and tougher lending conditions, plunging the country into recession from which it only began to emerge last year.

The banking sector, which had issued mortgages with abandon during the boom years, now holds more than 100 billion euros ($139 billion) of problematic real estate assets that it had been forced to seize.

The Bank of Spain on Thursday estimated the banks need 15.15 billion euros to clean up their balance sheets, but analysts believe the amount is several times more than that due to the decline in value of the property assets.

© 2011 AFP

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