Spain's Martinsa Fadesa to file for administration

Spanish property company Martinsa Fadesa said on Monday it would file for administration after failing to raise funds and meet debt payments, marking one of the biggest corporate failures in the country's history, Reuters and Bloomberg reported.

Martinsa Fadesa, with EUR 5.4bn of debt, said the move was triggered by its failure to raise a EUR 150mln loan -- a requisite of EUR 4bn refinancing agreement earlier this year. Martinsa Fadesa had asked its 47 creditor banks for the deadline to be extended until August 7.

The administrators will now start selling assets to repay creditors, including Caja Madrid, La Caixa, Ahorro Corporacion and Morgan Stanley.

A slump in Spanish home sales, combined with rising borrowing costs, has made it harder for property companies to pay their debts. Sixty-five developers and real estate brokers based in Spain have sought bankruptcy protection this year, according to Credito y Caucion, a Spanish credit insurer.

Trading in Martinsa shares was suspended on Monday in Madrid. Before the suspension, the shares fell as much as 29% to their lowest level ever. Spain's five largest developers have lost EUR 6bn in market value this year.