Large banks are following Talgo’s new solution

Major banks are keeping an eye on a new solution proposed for the future Talgo. Interest shown by steel company Sidenor To take control of the Basque railway, the manufacturer has a derivative financial instrument. Talgo creditors, including Santander, BBVA And KaishaBank, Sabadell“They may have to evaluate the possible proposal that will be put forward when the future of the operation, which has the support of both the central and Basque governments, is finalized.”

The major banks to which Talgo has some debt have had to review its public acquisition offer (OPA) submitted by the Hungarian group a few months ago. Magyar carriage acquire 100% of the company at a price of 5 euros per share. Subjects had to decide whether exercised the so-called change of control clause which involve this type of credit and allow a company’s creditors to veto an acquisition if it jeopardizes its financial position.

Company led Andras Tombor Before submitting a takeover bid, he obtained assurances that businesses would not take advantage of early repayment guarantees. “We have achieved permission of all persons related to Talgo“, he boasted in an interview with the publication Extension in August last year. He then stated that the banks represent a total of 24 entities whose total value between loans and guarantees is approximately $3 billion. Half of them had change of control provisions.

However, the city government Pedro Sanchez vetoed an operation promoted by the Hungarian conglomerate Ganz-MaVag Europe, citing national security concerns. Moncloa is now confident Sidenor’s solution can move forward after being confronted with an option proposed by Czech Skoda Transportation. Talgo needs to increase its production capacity as it struggles to cope with a large order book of more than €4 billion, which includes large contracts for Deutsche Bahn (BD) GermanDanish DSB or Spanish Renfe.

The key to the role of the creditor banks, of which there are more than twenty, lies in the formula chosen to gain control of the company. And there are several possible scenarios. The expression of interest sent by Sidenor a few days ago in the form of a letter to Talgo even opened up the possibility of acquiring 100% of the capital of the train manufacturer. But besides the will expressed by the businessman’s signature Jose Antonio HainagaThere is still no firm proposal, and it appears a more diversified formula is being developed in which more companies could participate.

Thus, Sidenor will take a position not exceeding 29.9% of the company’s share capital, thereby avoiding the need to launch takeover bid. “We have to look at what the scheme is and if it leads to a change of control, the banks will have to speak out,” explains a financial sector source. In any case, the British Foundation Trilantic – which controls 30% – has been wanting to leave for some time. But this is in the instrumental part Pegaso Transportwhich owns 40.03% of the Basque company and in which they are also members Torrealinvestment instrument Juan Abelloand family Oriole. Thus, it remains to be seen how the absorption of the remaining 10% will be formulated.

Whatever the scenario, businesses will have to evaluate, among other things, the future viability of the company they see based on the proposal presented. They will also examine the resulting shareholder structure and other variables that will allow them to have confidence in the company’s future business plan. From there, they will also be able to renegotiate the terms of the financing. According to reports for the first semester, The company’s net financial debt doubled, rising from €175 million to €357 million.of which 107 expire this year.

Sidenor is an industrial partner but does not specialize in train production. And that was one of the demands I made Criteriainvestment arm of La Caixa, to become a financial partner in a possible alternative to the Hungarian takeover bid, which Moncloa was trying to pursue because Hungarian interests were out of scope. But the organization insists there is no news about their position and that no one has contacted them to explore an alternative.

In parallel with private banking, the change of control that is looming over Talgo shareholders may also require approval European Investment Bank (EIB), which is now led by a former vice-president of the Spanish government. Nadia Calvino. In 2022, the community body signed a €35 million green loan to finance the Basque company’s research, development and innovation strategy.

While we wait to see how everything is resolved, the truth is that the company has regained its position in the stock market. Before last Thursday, Talgo shares had risen 15% in three days. Although yes, they are listed at 3.82 euros, which is far from the 5 euros that the Hungarians were willing to pay and which satisfied the demands of the majority shareholders of the Basque company.