Efacec investors accept Mutares €5.8M haircut

 In Companies, Mergers and Acquisitions, News

The general assembly of bond holders at electrical and transport systems company Efacec have voted to accept a €5.8 million reduction in the value of their bonds in the company.

The company was purchased from the Portuguese government by the German vulture fund Mutares that specialises, among other asset management activities, in buying up distressed assets with potential, investing and restructuring them and selling them off at a profit.
The haircut will allow 10% of the company’s debt to be liquidated as part of the Efacec’s reprivatisation process according to the online news source ECO.
Accepting a drop in the value of the shares was one of the conditions insisted upon by Mutares to buy the company with the sale expected to be formalised within the next few weeks.
Shareholders were faced with a debt of €29 million that has now been cut to €10 million or from 50% to 10%. This means that the bond holders have collectively and effectively lost millions but not as much as initially expected.
The announcement that the company would be acquired by Mutares was announced on July 2 but has dragged on since then for the company that the Portuguese government seized from Angolan tycoon Isabel dos Santos after she was at the centre of the Luanda Leaks investigation linked to tens of millions of euros syphoned off illegally from the Angolan State oil company Sonangol, and which erupted in early 2020.
Now, the completion of the sale to Mutares should be finalised by the end of this month of the start of November.
Mutares’ proposal presupposes an initial loss for the Portuguese State of €112.8 million (100%) — a sum that could eventually be all of partly clawed back at some stage in the future, although how the mechanism has been worked out has not been revealed. The banks will lose around 80% of the credit they had loaned to the company.
The bond holders were initially asked to accept a 50% devaluation in their bonds, but that was whittled down to 10%.
All told, Mutares has succeeded in getting €192 million of the debt written off by the banks, State and bond holders.
Mutares has imposed a condition that Portugal’s development bank Banco Português de Fomento (BPF) ‘invests’ up to €50 million in convertible bonds to be issued by Efacec while the State umbrella company that controls Portugal’s public companies, has to pump in around €50 million before the sale can go through.
The purchase of the convertible bonds will be made via the Capitalisation and Resilience Fund (FdCR) within six years.