Thursday meeting may shed light on Abertis buyout

Spanish savings bank La Caixa – the main shareholder in Spanish developer Abertis – may decide this Thursday if it will move forward with a planned buyout of Abertis together with fellow shareholder ACS and European private equity firm CVC Capital Partners.

A source close to the savings bank told Infrastructure Investor that La Caixa’s board of directors will hold its monthly meeting on Thursday, and if the Abertis buyout is not addressed during the meeting, then the deal will necessarily have to be pushed back by at least another month, until La Caixa holds its August board of directors meeting.

Officially, Spanish construction company ACS and savings bank La Caixa – Abertis’ main shareholders – have only confirmed they are looking into ways of bringing CVC into Abertis’ capital and that a buyout is one of the possibilities to make that happen.

Unofficially, rumours are swirling on the size of the offer the consortium will make, the amount of debt provided for the deal, and the final structure of Abertis’ shareholding tree.

Originally, the consortium was said to be planning an offer of €12 billion to buy Abertis, which had a pre-negotiations market capitalisation of close to €9 billion, according to the Financial Times. The offer would be funded with some €8 billion in debt and €4 billion in cash from the three consortium members.

But with banks being reticent regarding their exposure to the troubled Spanish market, the debt package is now likely to be just above the €5 billion mark, two sources involved in the deal previously told Infrastructure Investor. Between 14 and 20 banks are looking at the transaction, they added, with Italy’s Mediobanca putting together the bank club.

This reduced debt package, one of the sources added, may push the consortium to plug more equity into the deal, with the source suggesting CVC might go the extra mile to make the buyout happen:

“What we are seeing – not just with CVC but with private equity firms in general – is that they are getting messages from their limited partners (LPs) telling them to do something with the money they have given them,” the source said.

“If you look at the kind of returns they [LPs] are seeking, then there is a good chance CVC will pursue this sort of opportunity and put more equity into it if the debt capacity is reduced,” he added.

A third option – which one source said is being discussed but is “highly sensitive” – would be for the consortium to launch an offer for a smaller number of Abertis’ shares. Market speculation is suggesting the consortium would seek to leave only about 10 percent of Abertis shares in free-float, down from the current 45.69 percent. But the source suggested leaving more shares in free-float than originally envisaged is also a possibility, depending on the funding package.

The latest rumours in the Spanish press suggest La Caixa might drop out of the deal altogether or decide to sell just 5 percent to 10 percent of its current 28.5 percent stake in Abertis. The reason would be to appease Spain’s central bank, which has allegedly shown displeasure at La Caixa being involved in a large leveraged buyout at a time when Spain’s savings banks are being pressured to shore up their capital.

But the source close to La Caixa denied any conflict with the central bank, known as Banco de España, over the potential transaction. The source did reiterate, however, that the buyout was just one of many possibilities being studied.

ACS currently holds 22.8 percent of Abertis after it lent a 3 percent stake to French bank Société Générale. If the planned buyout goes ahead, there is a speculative consensus that La Caixa will retain its position at the top of Abertis’ shareholding tree. It would be followed by CVC Capital Partners as Abertis’ second-largest shareholder with ACS being the third-largest shareholder in the company.