Spain’s Reyal Urbis Seeks Bankruptcy Protection (Feb 2013)

 bankruptcy

Source: Reuters – Spain’s Reyal Urbis Seeks Bankruptcy Protection

Notable excerpts:

Reyal Urbis SA, a real estate firm that became a stock market darling before Spain’s property boom went bust, said it will file for bankruptcy protection in the face of what could become the second-largest default in Spanish corporate history.

The firm, born of the merger of Inmobiliaria Urbis and Construcciones Reyal a year before the real estate crash of 2008, said in a statement Tuesday that it expects to reach an agreement with its creditors.

Reyal Urbis, controlled by construction tycoon Rafael Santamaria, owes EUR3.6 billion to a group of banks including SAREB, the government-run “bad bank” created last year to buy non-performing property loans and other assets from the country’s ailing commercial banks.

It was unclear whether Reyal Urbis’ bankruptcy filing would have a negative impact on the bad bank and the government’s finances.

Martinsa-Fadesa, another real estate firm, completed the largest-ever default in Spanish corporate history when it reached an agreement with creditors in 2011 to restructure about seven billion euros worth of debt. That was more than a year before Spain in 2012 secured a 39 billion euro European Union bailout for its banking sector that led to the creation of the bad bank.

Reyal Urbis was involved in talks with creditors in recent years as it sought to stay in business as Spanish property dropped by around 40% from their 2008 peak. The company said Tuesday it owes EUR400 million in unpaid taxes in Spain.

Besides SAREB, Banco Santander SA, U.S. hedge fund Appaloosa Management, and Banco Popular SA are among Reyal Urbis’ largest creditors.

Reyal Urbis has a current market value of EUR35 million. Trade in the company shares was suspended after Tuesday’s announcement. The stock last changed hands at 0.12 cents each. The share price hit an all-time high above EUR39 in December 2006.

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