Habitat avoids receivership after restructuring accord
Foreign banks holding out finally sign revamped loan deal28 February 2008
MADRID - Spanish real-estate firm Habitat yesterday escaped from the jaws of receivership after sealing a debt restructuring agreement with its creditors.
After three months of arduous negotiations, three foreign banks holding out for better terms on Wednesday finally signed the restructuring deal for a EUR 1.586 billion syndicated loan.
The last to sign was Barclays Bank whose share of the loan is EUR 27 million. The deal was signed earlier on Wednesday by Rabobank and Deutsche Bank.
Under the new terms of the loan, Habitat does not have to pay back any of the principal until 2010, which gives it a grace period to sell off its stock of property and other assets.
Habitat contracted the loan to buy the real-estate division of Spanish builder Ferrovial in December 2006, before a decade-long property boom in Spain started to peter out.
Home sales have been falling since the end of last year amid higher interest rates and falls in prices in some areas. The global credit crunch unleashed by the US subprime mortgage crisis has also caused funding problems.
The downturn in the residential property sector was evidenced by the mortgage figures for last year. The National Statistics Office (INE) said yesterday the number of mortgages granted dropped by just under 8 percent. In December alone, the number of transactions was down by over 15 percent.
Habitat, which has assets valued at some EUR 3 billion, is expected to book big losses for last year due to the downturn in the residential sector.
The property firm has also won the financial support of Ferrovial, which still holds a 20-percent interest in the firm. The builder has agreed to buy EUR 100 million in assets from Habitat.
Valencia-based real-estate firm Llanera went into receivership in October of last year. Fellow property company Astroc also ran into difficulties last summer and ended up merging with other companies in the sector.
[Copyright EL PAÍS 2008]