Duro Felguera: Dubai Bank executes a guarantee of 48 million and endangers its viability

Its latest accounts will reflect that the capital is 4.8 million euros and 16 million assets. Duro Felguera recalls that they have a provision of 156 million euros for contingencies.

Headquarters of Duro Felguera in Gijón.

After several unsuccessful videoconference meetings, Rough Felguera has not been able to stop the execution of the guarantee of 48 million euros by Dubai Bank. A few weeks ago, the Spanish company requested arbitration to resolve the situation and try to renegotiate the agreements for the construction of a power plant in the Middle Eastern country, a contract valued at 204 million euros.

As confirmed invested, contacts have been maintained this Thursday in which Rough Felguera and the company’s CEO team, Jose Maria OrihuelaThey tried to stop in extremis the execution of the guarantees requested by Dubai Bank. However, from the company they assure that it is a letter requesting a meeting to address the issue.

A similar meeting took place last week which also ended without agreement. In this way, Dubai Bank has once again stated its intention to execute the guarantee and has requested to recover the 48 million euros. The precautionary measures requested from Duro Felguera remain up in the air.

A situation that puts the company at serious risk of viability, which after multiple reductions has a capital of 4.8 million euros and 16 million in equity, as will be reflected in its next annual accounts. Some figures that a group that in 2019 billed 397 million euros cannot sustain.

If we add to this the bankruptcy process that its subsidiary in Australia has initiated, with an estimated impact on its accounts of another 60 million euros, the chances of entering into a situation of negative equity and subsequently insolvency are quite high.

From Rough Felguera They avoid making any comment regarding this information. They recall, in any case, that there is a provision of 156 million euros made in February 2019 for possible litigation and contingencies with the projects legacy. In other words, any problem would go against that money and not against the company’s cash.

Relationship with banks

The main problem is that Duro Felguera has once again lost the confidence of the bench who does not look favorably on the latest proposal from CEO José María Orihuela. The proposal published by Five daysasks the bank to buy their debt with a reduction of 85% of the 85 million they owe.

Financial sources insist that this proposal was put on the table almost a year ago and, for now, there is no agreement. It is not seen with bad eyes, but to execute it the banks demand a business plan that never arrives.

From the environment of the Asturian remember that the banks already know the business plan, which is the one presented at the last shareholders’ meeting and is being strictly complied with. The only part that they do not comply with, they explain, is the contracting because the banks do not release the guarantees.

The creditor entities Rough Felguera, led by Santander, BBVA, Caixabank, Sabadell and Bankia they are the only ones that could keep the entity afloat, but recent events put this relationship in danger. These banks have already taken write-offs worth some 300 million euros in the past to save the Asturian company.

In less than a month Rough Felguera You will need to publish your accounts which are currently being audited by Ernst & Young and developments in Australia and Dubai they jeopardize any positive assessment of the auditors who are facing events that endanger the viability of the company.

In 2019, the Asturian group achieved some earnings of 10.98 million euros. A figure that contrasts with the losses of more than 119 million that it reaped in 2018 if the injection achieved by the capital increase is discounted.

net debt

These results were accompanied by sales of €397.6 million which meant a fall of 5% compared to the previous year. Hiring amounted to 105.5 million, which is 35% more than in 2018.

The company itself acknowledged that “the non-availability of the line of guarantees committed to in the refinancing agreement signed in 2018, is making it difficult to reach the contracting levels foreseen in the strategic plan.”

The net debt of Duro Felguera reaches 3.5 million euros, although net liabilities reach 128.3 million euros. The group also says it has claims with clients worth 244 million that have not yet been recorded in the financial statements. They expect most of those claims to be favorable to the company.