FCC Jumps as Spain May Pay $66 Billion of Debt: Madrid Mover
February 23, 2012, 3:04 AM ESTBy Manuel Baigorri
Feb. 22 (Bloomberg) -- Fomento de Construcciones & Contratas, Spain’s fourth-largest builder, rose the most in almost five months as the government is set to approve a plan to pay debt owed by the country’s regions and municipalities.
FCC gained 9.6 percent to 20.19 euros in Madrid, the biggest increase since Sept. 29. Budget Minister Cristobal Montoro commented on the payment proposals in the Senate yesterday. Spain’s biggest banks and the state-run Official Credit Institute are participating in the plan, details of which will be announced Feb. 24, a Budget Ministry spokesman said.
Spanish construction companies including FCC and Actividades de Construccion & Servicios SA have been hurt by cuts and growing debt in Spanish regions, which are halting projects funded with public money as the country grapples with one of the euro area’s largest deficits. Both companies also offer services such as waste recycling and waste collection to thousands of municipalities.
“FCC, as well as ACS, is quite leveraged and this news allows the company to soothe its financial position,” Francisco Salvador, a Madrid-based strategist at FGA/MG Valores, said today by phone. “It will have a positive impact in the short term as it’s going to be effective immediately. This will also lower funding costs for public works.”
The total owed to suppliers by the regions and municipalities may be as much as 50 billion euros ($66 billion), newspaper ABC reported today, citing unidentified people at the ministry.
ACS, Spain’s biggest construction company, rose 2.7 percent to 24.24 euros, valuing the company at 7.6 billion euros. Barcelona-based FCC was the biggest gainer today in the IBEX 35 Index.
FCC’s Debt
FCC’s net debt at Sept. 30 was almost 7.8 billion euros, about the same as in December 2010. The construction company “significantly” beat its target of reducing the figure to 7.5 billion euros by the end of 2011, Chief Executive Officer Baldomero Falcones said earlier this month. FCC is scheduled to release full-year figures on Feb. 28.
--Editors: Robert Valpuesta, David Risser.
To contact the reporter on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
