This week OHL made a rapid placement with institutional investors of 4.425% of Abertis (43.83 million shares) at 13,65 euros/share, about a 1% discount to Monday’s closing price of 13,79 euros/share. It now owns 2.5% of Abertis. OHL plans to earmark most of the cash obtained (a little under 600 million euros) for amortising ahead of time the guaranteed credit without recourse related to the afore-mentioned stake in Abertis (266 million euros) and for cutting group debt with recourse (273 million euros).
Capital gains from the sale were 230 million euros. The remainder of the cash obtained (about 59 million euros according to our estimates: 990.4 million euros – 266 million euros – 273 million euros) will be used for buying back OHL bonds in the market with a discount. OHL has commited to not selling any more Abertis shares for 180 days.
Goldman Sachs is now OHL’s third biggest shareholder, after raising its stake over the last 2 weeks to 6.11% from 3.45%. Inmobiliaria Espacio has 54.47% and Tyrus Capital 8.37%.
According to Bankinter’s analysts, this is all very good news for OHL and neutral for Abertis, given that OHL has committed to not selling any more shares in the infrastructure and concessions group for 6 months.
“Furthermore, the discount on the sale is small. But it is a very positive move for OHL because it enables the company to cut its debt, which is its main weakness. And the fact that it has cut its stake in Abertis to no more than a token level, breaking their previous strategic bond, means that it can once again bid for motorway concessions in Brazil.This is important in the context of the first phase of highway privatisations which the state of Sao Paulo will implement in November (for a total of 2.000 km). With this operation alone, OHL will cut its net debt by approximately 20%, to about 2.3 billion euros, and its DFN/Ebitda ratio 2017e falls from 3,0x to 2,4x.”
So with the sale of the stake in Abertis, OHL manages to reduce its debt and also free itself up from its commitment to Abertis in Brazil, which prevented it from expanding in a country which will have privatisations in the coming quarters.
Finally, the 2.5% of Abertis which OHL still has would generate potential liquidity of some 338 million euros and 70 million of capital gains. This gives it an additional cushion for further debt reduction and increasing results in the short-term.