Banks loan €70 million to Efacec

Portugal’s five main banks, CGD, BCP, BPI, Montepio and Novo Banco lent around €70 million over a four year period to the Portuguese electrical installations and technology company Efacec.

The amount of cash lent in the syndicated loans was distributed in proportional parts according to the amount of credit exposure that each bank already had with Efacec which was temporarily nationalised last month after registering huge losses.
The company had been mostly owned by disgraced Angolan tycoon Isabel dos Santos of Luanda Leaks fame who is being investigated in Portugal and Angola for embezzling and money laundering funds that had belonged to the Angolan State and which were then, it is alleged, ploughed into several Portuguese companies to cover tracks.
The €70 million, which has been guaranteed by the State, has been earmarked to reestablish financial balance and normal operations at the company.
However, the money will not substitute the loans that CGD, BCP and Novo Banco had already loaned to Efacec and which were made to ensure the company remained operational.
According to an official source from the Ministry of Finance, cited by Dinheiro Vivo and Jornal Económico, “The contracting of finance to the total value of €70 million is destined to support cash-flow and reestablish conditions of financial and operational normality.”
Initially, Efacec applied for a €50 million bank loan so that the energy and engineering company could meet its financial commitments, including workers’ holiday allowances, but that amount has shot up since being nationalised.
Efacec was nationalised by the Government on 2 July on the grounds that it was the only way to keep the company afloat while a “shareholder stalemate continued to be resolved following the seizure of Isabel dos Santos’ shares in the company at the end of 2019,” according to the Minister of State, Economy and Digital Transition, Pedro Siza Vieira, who added that the State had to “intervene to save 2,500 jobs”.
Minister Siza Vieira clarified, at the press conference in which he announced that the State had nationalised 71,3% of Efacec, that compensation would be paid. This is because under privatisation framework law “private shareholders of nationalised companies have the right to compensation”.
The bank lenders too may claim right to compensation
Efacec’s nationalisation law already opens the door for banks to claim the right to compensation, probably through the insolvency process involving Winterfell 2, a company owned by Isabel dos Santos which is headquartered in Luxembourg, which would imply registration as creditors of the bankruptcy estate (which would essentially consist of state compensation).
According to Dinheiro Vivo, the Government is making an “assessment that will determine the amount of any compensation to which the previous shareholders may be entitled and which is being pursued by the Directorate-General for Treasury and Finance (DGTF), which is in the process of selecting the entity to be hired,” states the online business news source.
It is already known that EY and Moneris are the two consultant entities that will evaluate and value Efacec in order to work out the amount of compensation to be paid by the State to shareholders, as required by law.
State-owned umbrella company Parpública, which took a 71,73% share of Efacec, has already started the privatisation process, and as reported by Jornal Económico, it hired Haitong Bank and the law firm SRS to advise on the sale of Efacec Power Solutions, SGPS.
According to what Jornal Económico has learnt, the Government wants the sale of Efacec to take place by the end of the year, which market sources admit is “a too tight a schedule”.

New stakeholders

In addition to those private interested parties who had already indicated an interest in the company before nationalisation, fresh interested parties have also shown an interest and have conveyed that interest to Parpública for the re-privatisation process.
“Expressions of interest have also come in from other sides,” said Pedro Siza Vieira, without specifying which, but stressing that now the company based in the north of Portugal “no longer has the same difficulties that it was experiencing recently” caused by the situation of its former majority shareholder, Isabel dos Santos.
On 26 June, before its nationalisation, Efacec had announced that it had received “about a dozen” non-binding proposals from industrial groups and investment funds, both national and international, for the acquisition of Isabel dos Santos’s capital in the company.
Newspaper Expresso reported that front runners might be funds like Alpac, Sodecia, Elsewedy, Ormazabal, Iberdrola, Oaktree and First Reserve. The weekly also said that Egyptian Elsewedy would have submitted the highest bid in the previous contest, conducted by StormHarbour, before nationalisation.
Efacec’s shares passed to the State, when it was nationalised, “Free from any encumbrances or charges, for all legal purposes,” which led to the forfeiture and attachment of the shares held by the creditor banks Montepio, BPI, BIC Angola, CGD, Novo Banco and BCP, for the loan granted to Winterfell 2, which amounted to €110 million. This amount is already provisioned in all banks, including Montepio says Jornal Económico.