George Soros Set for Major Stake in Spanish Builder FCC

17th November 2014Overseas

208624014aa622c4af46f9b54fbfc290MADRID—U.S. billionaire George Soros is set to become one of the largest shareholders in leading Spanish builder Fomento de Construcciones y Contratas SA during a €1 billion ($1.25 billion) capital expansion aimed at reducing the beleaguered company’s debt.

An agreement announced Friday between Mr. Soros and the company’s main shareholder, Esther Koplowitz, was the latest of several high-profile deals that have put Spain on the global investment map since its economy emerged from recession in the summer of last year.

Mr. Soros and Ms. Koplowitz, two of the richest people in the world, would hold roughly equal shares of 25% in the Barcelona-based company, according to a person close to Ms. Koplowitz.

Under the deal, this person said, Mr. Soros will buy all Ms. Koplowitz’s rights to acquire shares in the capital increase—an investment of €650 million to €660 million, depending on the share price.

FCC, as the firm is known and which employs 80,000 people in 56 countries, is a construction and services company that flourished during a decadelong property boom that, at its peak, had Spain building more homes than Germany, France and the U.K. combined. Since the building bubble burst with the onset of the 2008 global financial crisis, FCC has battled to restructure a large debt.

Ms. Koplowitz owns 50.02% of the company, which grew from a firm founded by her father, a German Jewish émigré, during the dictatorship of Gen. Francisco Franco.

Mr. Soros owns 3.8% of FCC. He bought his stake last year, weeks after Microsoft Corp. Chairman Bill Gates paid €108.5 million for a nearly 6% share that made him FCC’s largest investor after Ms. Koplowitz.

Over the past year, Warren Buffett , Carlos Slim , among other tycoons and leading investment funds, have snapped up Spanish assets on the cheap, betting that the country is on its way to a sustained recovery after two recessions over five years. The European Commission has said it expects Spain’s economy to grow 1.2% this year and 1.7% next year.

FCC’s Chief Executive Juan Bejar on Friday announced some elements of the agreement with Mr. Soros in a conference call with analysts, sending the company’s share price up 7% in morning trading to €14.44.

The company has been selling assets and making redundancies to pay off a net debt that stood at €6.4 billion on Sept. 30.

The person close to Ms. Koplowitz said Mr. Soros had agreed to keep his new shares for at least four years and would sit on FCC’s board. The arrangement “assures the company’s viability,” said Predrag Dukic, director of CM Capital Markets.

FCC’s board was scheduled to vote next week on the capital increase. The company said funds raised by issuing new shares would be used to repay debt and bolster the capital reserves of its units outside Spain.

The company on Friday reported net losses of €788.3 million in the first nine months of this year, largely the result of a €769 million write-down on assets.