Fri 12/31/2021 08:08 AM
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Relevant Documents
Dec. 29 Release (in Spanish)
Dec. 17 Release (in Spanish)

Spanish engineering group Duro Felguera, or DF, is prioritizing winning more contracts over finding a new industrial investor, sources told Reorg. The company is looking to improve its valuation to increase its chances of securing a better deal with a new investor. Continue reading for Reorg's coverage of Duro Felguera, and request a trial for access to reporting and analysis on hundreds more stressed, distressed and performing credits. 

DF has been struggling to close a deal with a partner. On Nov. 30, the company said that it “remains committed to integrating an industrial partner in the company.” At the time, DF said that the process was ongoing and that it continued to receive signs of interest from potential investors.

The company has received nine non-binding offers, but only three are currently in the running and parties have signed non-disclosure agreements to continue negotiations, sources said. Offers came from both Spanish and international investors. Any offers from foreign investors above €500 million or 10% of a company’s share capital must be pre-approved by Spain until Dec. 31, 2022, according to a Nov. 23 government order.

In the summer, DF received non-binding offers from investors including Ultramar Energy, Capital Energy and China Railway Construction Co. Under the terms of DF’s first restructuring proposal, an industrial partner would inject up to €50 million in the business and obtain up to 29% in company equity in return. Currently, the terms of the offer are not defined and will be agreed to with the winning bidder, sources added.

DF’s €120 million state financial aid package, as well as its debt restructuring, were initially conditioned by the company finding an industrial investor, but the terms of the deal were modified to exclude it as a condition and instead set up as a “firm commitment” by the company to find a new investor, sources said.

Instead of receiving the originally planned €30 million in a capital increase or equity-linked loan (préstamo participativo), a €70 million loan and a €20 million ordinary loan from Sociedad Estatal de Participaciones Industriales, or SEPI, DF’s financial aid was altered to €40 million in loans (half equity-linked, and the other half ordinary) and €80 million in equity-linked loans.

DF received the second tranche of its financial aid package in mid-November, and got up to €80 million in new revolving bonding lines (70% guaranteed by Spain’s export credit agency CESCE) from its lender banks in December. The granting of new funding has “allowed the company to rebalance its equity and finances, and to execute its viability plan,” DF said on Dec. 12. The group said it expects to achieve €170 million in new contracts in 2021 and targets about €800 million by 2027, the last year of its current viability plan.

New Contracts

A joint venture including DF has been awarded a part of a €2.9 billion project in Poland, the company said on Dec. 17. This was the first contract won by DF after receiving state aid.

DF, Hyundai Engineering and Técnicas Reunidas will build a washing tower in the expansion project of the olefins plant of a refinery owned by Polish company PKN Orlen. Construction of the tower is expected to be concluded by December 2022.

On Dec. 29, DF announced a new contract with German engineering company TGE Marine Gas Engineering, to manufacture two bilobar cargo tanks to contain liquefied natural gas for a bunkering barge.

--Laura Vilaça
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