After three years of legal wrangles, creditors including Strategic Value Partners, Deutsche Bank AG and Sculptor Capital Management will become the new owners of Spanish steelmaker Celsa Group.
(Bloomberg) — After three years of legal wrangles, creditors including Strategic Value Partners, Deutsche Bank AG and Sculptor Capital Management will become the new owners of Spanish steelmaker Celsa Group.
Under an order by a Barcelona court, ownership of the company will transfer from the Rubiralta family to its lenders, who will write off €1.352 billion ($1.5 billion) of debt. The plan will slash the company’s debt pile by about half, according to an emailed ruling.
The landmark ruling represents a win for the funds involved, becoming the largest restructuring so far to use a more creditor-friendly Spanish insolvency regime introduced last year. The group of creditors set to take over also include Anchorage Capital Group LLC, Attestor Capital, Cross Ocean Partners and GoldenTree Asset Management. They remain committed to maintaining the company’s operations in Spain and to safeguard jobs, according to their emailed statement.
Representatives for Celsa, as well as trade unions UGT and CCOO declined to comment.
The debt-for-equity swap means Celsa won’t need to avail itself of €550 million of rescue funding the Spanish government had pledged once it reached a deal with creditors.
The implementation of the restructuring is subject to Spain’s screening regime on foreign investment, and the effective control of the company by its creditors won’t be effective until the cabinet approves it, according to a statement from the Ministry of Industry, Commerce and Tourism.
“The government will negotiate with the new owners to guarantee the future viability of the company, as well as the integrity of its business units, employment, the continuity of the social domicile in Spain and the set up of a modern, independent and professional corporate governance,” the spokesperson added.
Valuation disparity
Part of the legal battle was fought over the question of the company’s valuation.
In his ruling, judge Alvaro Lobato Lavin called into question the company’s estimates, as well as an independent business review conducted by accountant PwC and reports by Lazard Ltd. and BDO. His ruling cited inconsistencies with company reports from January 2023 and those in June and October 2023.
It also flagged gaps between cash flow, net sales volume and “green premium” metrics from the company and market consensus.
“The financial forecasts that have been the base for both reports are a formidable exercise of voluntarism, an exciting letter to the Three Wise Men certified with the varnish of PwC to make sure it reached its destination,” the judge wrote. “Its content vanishes when contrasted with the harsh rebuttals from reality.”
Spokespeople for Lazard and BDO declined to comment while PwC didn’t reply to a request for comment.
–With assistance from Alonso Soto.
(Updates with comment from ministry starting in the seventh paragraph.)
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