Spain's Reyal Urbis nears bankruptcy

 

Creditors of Spanish construction company Reyal Urbis rejected the company's €3.6 billion debt restructuring proposal, two sources familiar with the talks said on Friday, pushing it a step closer to bankruptcy.

Reyal Urbis, battered by the sharp downturn in Spain's property sector, had until February 23 to reach an accord with its lenders or begin bankruptcy proceedings, a deadline set by the courts.

Although last-minute talks are still possible, the sources said the company's lenders and Spain's so-called bad bank, where some of the loans are now parked, were not eager to refinance Reyal, making bankruptcy the most likely option.

Reyal Urbis said in October if it could not reach an agreement with its creditor banks it might need to seek creditor protection.

Several attempts to reach the firm on Friday were unsuccessful.

The company's creditors include Santander, BBVA, Bankia and Banco Popular. Bankia and Banco Popular declined to comment while no-one at the other banks was immediately available.

"The proposal included a request to free up a series of mortgaged assets which the company could sell for short-term liquidity, but there was no agreement," one of the sources with direct knowledge of negotiations said.

"A majority of the banks and (Spain's "bad bank") SAREB have already set aside provisions for the loans, so they have little interest in kicking the can down the road," the source added.

The fallout from a burst property bubble, after a decade-long housing boom, has left Spain with more than half a million unsold new homes and scores of property groups going to the wall as house prices tumble 40% from a peak in 2007.

Reyal Urbis said in October if it could not reach an agreement with its creditor banks it might need to seek creditor protection.

Its assets were worth €4.2 billion at end-June compared with debt of €4.3 billion, the company said.