UPDATE: Citigroup Fund To Buy Sacyr's Itinere For EUR7.89 Billion
Monday December 1st, 2008 / 9h18
(Adds more detail.) By Christopher Bjork Of DOW JONES NEWSWIRES MADRID -(Dow Jones)- Spanish construction company Sacyr-Vallehermoso SA (SYV.MC) said Monday it had agreed to sell toll road operator Itinere Infraestructuras SA to a Citigroup Inc. (C) infrastructure fund. The deal values Itinere at EUR7.89 billion, including EUR5.01 billion in debt that will be assumed by Citi Infrastructure Partners, Sacyr said in a press release. Sacyr, which embarked on ambitious acquisitions when liquidity was abundant and is now hit by ballooning financing costs and a crumbling construction market, said the deal would cut group debt by as much as 37%, from EUR19.73 billion to EUR12.48 billion. Sacyr and Citi had been in talks for some time. Negotiations were almost completed a couple of weeks ago, but valuation disagreements prevented the deal to be signed just when Citigroup was facing intense solvency pressures at home, people close to the talks have said. The deal is subject to approval from competition authorities and other relevant regulators, Sacyr said. Under the terms of a complex agreement, Citi will launch a bid for 100% of Itinere. Sacyr will sell 42.8% of the unit to Citi in a first stage, and another 11.6% in a second stage. Meanwhile, Citi will sell back to Sacyr several highway concessions that are still in a ramp-up phase, for EUR450 million. Citi has also made a separate agreement to resell some Itinere highways in Spain, Portugal, Brazil and Chile to infrastructure companies Abertis Infraestructuras SA (ABE.MC) and Atlantia SpA (ATL.MI), for roughly EUR1 billion. The deal will give Sacyr a much needed shot of liquidity, as it faces EUR2.11 billion in debt maturing next year. Earlier this year it attempted to list Itinere on the Spanish stock exchange, but that operation failed due to lack of demand. Sacyr was advised by Mediobanca (MB.MI). In tandem with the Itinere sales process, Sacyr has been in talks with potential buyers of its 20% stake in Spanish-Argentine oil company Repsol YPF SA (REP). Monday's deal is likely to give Sacyr - which was under intense pressure from its creditors to cut down on debt - more flexibility in these talks. Sacyr's shares were suspended Monday in Madrid. The stock closed Friday at EUR7.56. -By Christopher Bjork, Dow Jones Newswires; +34 91 395 81 23, christopher.bjork@dowjones.com (Santiago Perez contributed to this item.) Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=cyyj%2Fj9l%2Faz7taM%2FBIG0ZQ%3D%3D. You can use this link on the day this article is published and the following day.
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