Isolux has a patrimonial hole of 3.83 billion euros. This is one of conclusions reached by bankruptcy administration of group, which presented this Tuesday in court report on bankruptcy contest declared by seven companies — Matrix and six of its subsidiaries — in July 2017. In total, bankruptcy debt of se companies, as explained in a statement by administrators, amounts to 5,695,300,000 euros — regardless of duplicate liabilities of financial institutions or contingent liabilities — while assets of such Companies rise to 1.865 billion euros. Hence, enormous patrimonial hole that company has.
The administrators, who describe in ir report accounting state of company and review deterioration suffered in recent months, point as a cause of problem financial crisis, which made it impossible to overturn business in time in midst of crisis of Construction in Spain. They point out that initial perimeter of creditors competition includes central services structure of Isolux and infrastructure and engineering businesses, both in Spain and in rest of world. "The evolution and risks of competition will probably lead to need to compete most of rest of group," y move forward.
The Board of Directors of Isolux Corsán approved on July 4 to request contest of creditors for group and six of its subsidiaries after two years trying to overcome its financial difficulties and, in end, after failing to achieve an investor that entered its Capital and rescue him. The six members of Council, starting with president, Nemesio Fernandez-Cuesta, presented ir resignation, which company remains in hands of creditor banks. Two weeks later, Court of Commerce number 1 in Madrid declared in competition of creditors Isolux Corsán and six of its subsidiaries.
At time of entry in competition, explained administrators, situation of cash available in Spain "was very limited-barely to cover operative payments of one month-and initial forecasts of cash flow showed that in August re would be tensions of liquidity, "review bankruptcy administrators. The group had 119 works with portfolio pending to execute, of which were active a 33% (39 works) and stops a 67% (80 works).
They explain that risk of collateral (not including financial debt or advances) associated with active works amounted to 213 million euros, while works stopped amounted to 276 million. The finished works had guarantees of 1.125 billion of euros, which totaled a risk of 1.613 billion.
"After declaration of competition, it was diagnosed that it was not feasible to try to maintain historical construction activity of group and that, refore, we had to prioritize sale, transfer and/or liquidation of both projects and business units". They review ir task to put group in order, which has included stabilizing business and cash situation; Reactivate sales processes of business units and plan closing of non-saleable businesses.
The group's accounts showed consolidated revenues of more than 2 billion euros per year in 2014 and 2015, an activity that fell to 750 million in 2016. At origin of crisis of group, consider administrators, is impact that, in its construction activity, had crisis in Spain, "in particular financial crisis, outbreak of housing bubble and subsequent reduction in bidding of work Public, which came to suppose a 80% fall between 2007 and 2012. " All this led Isolux group to increase, in a significant way, " hiring of projects abroad and entry into concession business".
The restructuring of financial sector and thus reduction of availability of guarantees and financing of circulating difficult change that was developing in business profile of Isolux. The international projects did not reach historical margin levels, which coupled with financing needs in development of concessions led group to very high levels of debt.
The report of administrators recalls that group tried to reduce se levels of indebtedness with agreements with investment funds (Brookfield, PSP, etc) that were not maintained in long term and with two attempts of exit to BOLSA (in Brazil and Spain) that were Finally failed.
The situation deteriorated and fall in activity in recent years significantly worsened financial structure. In 2016, a financial restructuring agreement was reached with main financial institutions of group that have been shown not enough to stabilize situation and help to recover a level of activity to ensure economic viability and Avoid insolvency.