Spanish EAF producer faces creditor takeover

The current owners of Spain-based steelmaker Celsa Group have received an unfavorable ruling from a Spanish judge who has ruled in favor of an administrative takeover by several of the firm’s creditors.

Celsa operates scrap-fed electric arc furnace mills and other production facilities in Spain, France, Norway, Poland and the United Kingdom, and also operates a European network of 45 metal recycling facilities.

According to an early-September Reuters report, under a plan approved by a Spanish judge, Celsa’s creditors will own 100 percent of Celsa’s capital by converting into equity its 1.352 billion euros ($1.46 billion) convertible debt and part of its jumbo loan, while the maturities of the remaining debt will be extended by five years.

Among the larger creditors are Germany-based Deutsche Bank, London-based Attestor Ltd., New York-based Anchorage Capital Group, New York-based GoldenTree Asset Management and Connecticut-based Strategic Value Partners (SVP).

Representatives of those companies reportedly were unable to agree with the Rubiralta family ownership group on how to restructure approximately 3.2 billion euros of debt.

The report also refers to the case as one that will test a recently passed bankruptcy law in Spain that, in the opinion of some analysts, appears to favor creditors and makes such judgments final.

Reuters has reported that the judge and court who made the ruling in Barcelona have called the verdict final and one that cannot be appealed.

In a statement, the creditor group says it remains committed to maintaining the company’s operations in Spain and to making the firm “a European leader in the [steel] sector, to safeguard jobs and to ensure sound financial management.”

The group of banks and equity funds also says it will appoint a new board of directors who will have as a goal to maximize the value of Celsa.

While ruling in favor of the creditors in a 156-page ruling, the judge also says the group must comply with commitments that include not only increasing the value of the company but also “preserving jobs [and not] altering the strategic decision-making centers that are so important for the [presumably Spanish] economy as a whole.”

Reuters says the Rubiralta family and the creditors who won the court ruling had been sparring over Celsa’s valuation as part of a long-standing debt restructuring-related legal and corporate dispute.