Development bank rejected €30 million loan to Groundforce

Portugal’s new development bank Banco Português de Fomento turned down a €30 million loan request from removals king Alfredo Casimiro to help save Groundforce.

According to a document that news agency Lusa has seen, BPF informed the board president of the airlines baggage handling company SPdH/Groundforce, Alfredo Casimiro, that the loan application for €30 million over six years with a grace period of 18 months did “not warrant approval”.
Outlining its reasons, the BPF said that there wasn’t “a restructuring plan for the company” and pointed out that the shareholders had shown a “lack of a robust financial availability”. In other words, if its shareholders weren’t prepared to risk their money, why should the bank.
“After having asked for additional clarifications that we believe are necessary in the various joint meetings between the BPF, CGD (Caixa Geral de Depósitos) teams and Groundforce, we believe, as we have stated, that there are various reservations as to the economic and financial viability of the company, as well as its capacity to pay back the loan requested,” said the bank.
BPF argued that the company did not have any thorough restructuring plan that had been approved by Groundforce’s management which adapted its costs structure to the new reality of revenues. In other words the company had no detailed plan to offset the fat that its revenues were less than its outgoings.
This, coupled with the slow recovery expected of the civil aviation airline industry made it too risky to loan the money.
The bank also expected the shareholders to be prepared to cover the €40 million of losses expected for 2020-2021 which, in turn, would have helped cover the recapitalisation of the company’s bank balance, at least for the near future.
Last, BPF also states that the “licences issued by the National Civil Aviation Authority (ANAC) for Groundforce to operate at Portugal’s airports will run out between 2023 and 2025, and that by 2025 70% of the proposed loan would still be outstanding and have to be paid off, yet the company could end up not having an operations licence” to continue in business thereby ensuring the loan was repaid.