A long-running battle for control of Celsa Group shifted to a Barcelona courtroom where the owners of the troubled Spanish steelmaker are trying to fend off a bid by creditors including Deutsche Bank AG and Strategic Value Partners to force a restructuring of a €2.8 billion ($3 billion) debt pile.
(Bloomberg) — A long-running battle for control of Celsa Group shifted to a Barcelona courtroom where the owners of the troubled Spanish steelmaker are trying to fend off a bid by creditors including Deutsche Bank AG and Strategic Value Partners to force a restructuring of a €2.8 billion ($3 billion) debt pile.
How much one of Catalonia’s largest employers is worth and whether it’s still solvent were among the points of contention as lawyers, bankers and consultants from the opposing sides locked horns this week. The Barcelona commercial court will start deliberations on its verdict after hearings conclude on Friday, a process that could take several weeks.
The creditor group filed a restructuring plan last year that would cut its debt by almost half but force the founding Rubiralta family to surrender ownership of one of Europe’s top producers of construction steel.
A key area of dispute centers on the calculation each side is using to put a value on the company.
The Rubiraltas, relying on reports conducted by Lazard Ltd. and AZ Capital, claim Celsa is worth €6 billion, while a report by financial consultancy firm Lexaudit — the court appointed restructuring expert — values the company at €2.8 billion.
At the heart of the disparity are the methods and sources of information used for the calculation because Celsa’s business making steel for construction and the auto industry using scrap and electric furnaces is different from that of some of its peers.
Pedro Pasquin, vice-chairman for Lazard in Spain, said the information provided by Celsa was most reliable because it comes from the people who know the workings of the business best. Another factor backing up Celsa’s numbers is the fact that the firm can charge a premium because it makes steel in a more sustainable way than its competitors, Xavier Puig, the firm’s chief financial officer, told the tribunal.
External Sources
But Carlos Asensio, a partner at Grant Thornton who worked with Lexaudit on the valuation of the company, said his team relied on external data because some of the information by Celsa looked skewed in the company’s favor.
Also at issue is the more than €2 billion of debt that Celsa stopped paying three years ago and is contesting in separate legal processes in Madrid. According to Lazard and accountants PwC, which did a solvency report at the company’s request, that amount shouldn’t be taken into account because those cases haven’t been resolved yet.
Meanwhile, a request from the Rubiraltas for creditors to take a haircut on the debt prompted a strong response from Houlihan Lokey, the financial adviser for the creditor group.
“If you think your shares are worth €3 billion and you’re asking for a haircut, that’s money that goes into the shareholder’s pocket,” said Manuel Martinez-Fidalgo, a managing director at the investment bank.
–With assistance from Eddie Spence.
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