Sacyr agrees major debt refinancing to keep business afloat

Spain's Sacyr Vallehermoso (SyV) said that its real estate development unit has reached an agreement with its banks in a bid to deal with its financial woes.

In a statement to the Spanish stock market regulator CNMV, SyV said that its construction arm has been granted a waiver on debt payments and interest for five and three years respectively, with an option to extend to up to eight years. Under the new financial plan agreed with its lenders, the company has received an additional EUR 250 mln in credit financing to keep the business afloat and complete existing projects. The company's debt load amounts to a total of EUR 1.4 bn at present.

Aimed at boosting its financial position, the plan has been negotiated for several months with a syndicate of 29 banks, the company said. Ernst & Young has advised on the process. As part of the deal, SyV has sold a total of EUR 335 mln worth of assets to its lenders, in exchange for debt of EUR 319 mln and a EUR 16 mln credit line.

'The closing of this agreement will contribute to the development of the objectives drawn by the SyV group, which are the internationalisation of the company, a reduction of its debt and cost reduction,' the company said.

SyV, which is active in several businesses ranging from construction, housing development, and rental business, has been selling throughout 2008 and 2009 in a bid to reduce its gearing, with major disposals including the sale of its one-third stake in French group Eiffage to local institutional investors.