Quatari financial shareholding in Spanish El Corte department group in suspense

Quatari financial shareholding in Spanish El Corte department group in suspense

As reported in TextileFuture on August 11, 2015 the Spanish El Corte Inglés Qatari participation in a deal that would make a Qatari investor the first foreign shareholder in Spanish retailing giant El Corte Inglés is facing unusually public resistance by a dissident member of the privately-held firm’s board of directors, this reports WSJ Wall Street Journal on August 13, 2015

Seven board members approved the deal and two members—representing Ceslar SL, an investment vehicle controlled by a nephew and four nieces of El Corte Inglés founder Ramón Areces, and Cartera Mancor SL—voted against it, according to people familiar with the decision.

On August 12, 2015, Ceslar went public with its objections, a rare breach of secrecy that reflected tensions within the founding family of one of Europe’s largest retailers. In a statement, Ceslar said El Corte Inglés, which refinanced its debt within the past two years, doesn’t need new financing. That position reflects some board members’ wariness of expansion beyond the retailer’s home market, where sales are picking up this year as the economy recovers. In addition, Ceslar said the retailer would pay above-market interest rates for the sheik’s cash. Ceslar, which holds nearly 10% of the company, said the management had brought in an outsider to dilute the power of other shareholders. It said the deal vastly underestimated El Corte Inglés’s real value. Representatives of El Corte Inglés and Primefin didn’t respond to requests for comment.

Ceslar spoke out ahead of the next step required to enable the deal: The board has scheduled an Aug. 30 vote on a proposed change of bylaws to allow Primefin to receive its shares from El Corte Inglés’s treasury stocks. Ceslar said it would take steps to try to halt “an operation clearly unfavourable to the interests of the current stockholders.”

Primefin’s investment in El Corte Inglés values the company at EUR 6.5 billion to EUR 8 billion, according to Ceslar’s calculations. Ceslar disputes that valuation, citing a 2013 estimate that the company’s real estate portfolio alone is worth EUR 18 billion.

Under the terms of the deal, Ceslar said, El Corte Inglés would pay at least 5.25% annual interest for Primefin’s cash—and as much as 7.5% if the company failed to meet ambitious growth targets through 2017. Factoring in the contractual penalty for any such shortfall, Ceslar said, the new investor could end up with as much as 15.25% of the company.

Ceslar SL is an investment vehicle controlled by a nephew and four nieces of El Corte Inglés founder Ramón Areces. An earlier version of this article said Ceslar SL is controlled by the daughters of El Corte Inglés founder Ramón Areces.

The majority shareholders are descendants of Mr. Aceres, the founder, who died in 1989. He was replaced by a nephew, Isidoro Álvarez, who built up the large treasury stock portfolio and resisted opening up the company to outsider investors.

After Mr. Álvarez´s death in September 2014, the chairmanship passed to his nephew, Dimas Gimeno. He voted in favour of the deal with Primefin, supported by the company’s two largest shareholders, the Ramón Areces Foundation—controlled by Florencio Lasaga, a longtime executive at El Corte Inglés—and IASA, a holding company controlled by Mr. Álvarez’s daughters.


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