OHL – Spanish banks extend the EUR313m of performance guarantees to January

All, 

The extension buys more time for OHL to reach an agreement with the bondholders that satisfies the banks. In order to put pressure on OHL, the banks have been rolling the Spanish performance guarantees on a short-term basis – usually for 3 months – over the past few years. This has encouraged OHL to restructure the business before the coronavirus crisis, and also to preemptively seek a debt restructuring agreement with the banks after the crisis started. However, it has also restricted OHL’s bidding activity and therefore revenue growth, as performance guarantees are an essential part of the tendering process. The new shareholders are currently in negotiations with the bondholders with the view of achieving a comprehensive debt restructuring that meets its potential 2021-2022 liquidity needs. In addition to the crucial performance guarantees, the lenders of the Spanish performance guarantees also hold EUR140m of cash collateral, which gives them significant bargaining power against the bondholders and the Amodio family. 

El Economista reports that OHL secured an extension of the EUR313m of performance guarantees in Spain to January 2021 from September 2020. The newspaper notes Santander, CaixaBank, Sabadell, Bankia, Credit Agricole and Societe Generale as the lenders for the line. This line is part of a much larger package of performance guarantees that supports OHL’s businesses across the world.  

We are looking forward to exchanging ideas on OHL with you. 

Juliano