Europe's Building Firms Caught Amid Rising Debt, Falling Profits

(Bloomberg) -- It was good while it lasted for Europe’s construction companies. The state kept them in work with a steady supply of contracts, local banks provided the financing and profits rose. Then came the financial crisis and the longest recession of the postwar era leaving states unable to spend and banks unwilling to lend. Much of the once-thriving industry has been pushed to the brink.

Here is a list of some of the companies under pressure:

Abengoa (Spain)

The Seville, Spain-based construction and engineering company, specializing in renewable energy plants, is being overhauled less than two years after a 9-billion euro ($10 billion) debt restructuring. The company is seeking support from creditors to restructure a rump of its old debt and to get 297 million euros of new funding.

Aldesa (Spain)

The Madrid-based builder shelved a 300 million-euro bond issue in May with management blaming fickle markets amid mounting investor concern for the health of the building sector.

Astaldi (Italy)

The Italian company filed for creditor protection in a Rome court on Sept. 28 amid dwindling liquidity and after failing to sell a key asset in Turkey. It’s now seeking funds to bolster cash flow until it manages to dispose of its share of the Turkish concession, paving the way for a much-needed capital increase. It has until the end of March to get the plan approved by the court.

Carillion (U.K)

The British firm, with contracts to run everything from hospitals to rail projects, filed for liquidation in January after failing to secure a government bailout. Its demise wiped out bank lenders and bondholders to the tune of 1.6 billion pounds ($2.1 billion), casting a shadow over the future of dozens of sub-contractors, suppliers and competitors.

Condotte (Italy)

Italy’s third-largest builder also encountered resistance from investors when it tried to issue a 300 million-euro bond in 2015. Three years later, the company filed for extraordinary administration in a Rome court.

CMC di Ravenna (Italy)

Following a sharp increase in debt during the first half of the year, investors started questioning CMC’s liquidity position. The contractor announced a conference call for Oct. 15 to provide an update on its cash position and especially on the collection of 108 million euros of delayed payments.

Isolux Corsan (Spain)

The Spanish construction group restructured its 1.6 billion-euro debt pile in 2016, two years after a debut bond issue issue and a failed attempt to take the company public. The overhaul wasn’t enough to keep Isolux afloat, however. The company filed for bankruptcy in July 2017.

OHL (Spain)

Founded by former Spanish business minister Juan Miguel Villar Mir, OHL sold its concession-unit last year, giving some respite to shareholders and creditors. It didn’t last long. The shares have fallen 66 percent in 2018 while the company’s bonds are back below par after the OHL reported increasing losses in the first half of the year.

Salini Impregilo (Italy)

Shares and bonds of Italy’s largest Italian builder have dropped to the lowest level in two years on account of its exposure to Venuzuela and investors’ fears of contagion spreading through the sector in Italy. It sold one of its U.S. units to reduce debt and increase dividends.

Trevi (Italy)

The builder specializing in so-called foundation engineering is currently working to fix a dam in Mosul, Iraq, that was previously controlled by the Islamic State. Having turned down an offer of a rescue loan from Bain Capital in September, management agreed to a restructuring earlier this week. The new plan comprises an equity injection and a 250 million-euro debt cut.

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