Home » Leading Spanish developer Martinsa-Fadesa against the ropes

Leading Spanish developer Martinsa-Fadesa against the ropes

Martinsa-Fadesa, the biggest developer of private housing in Spain, and one of the biggest players in the holiday home sector, is today struggling to avoid going into administration. The company’s shares have collapsed by close to 30% since the Madrid stock exchange opened this morning, on news that the company has not secured rescue financing.

Fadesa, which was bought last year by the developer Martinsa to form Martinsa-Fadesa, is struggling under 5.1 billion Euros of debt, most of which was used to finance the takeover.

2 months ago, unable to cope with its interest payments as a result of the credit crunch and Spanish property market crash, Fadesa was forced to renegotiate 4 billion Euros of its debt with a consortium of lenders. Now it has failed to meet a key condition of the agreement, namely to secure a 150 million Euro loan from Spain’s Institute of Official Credit (ICO). The ICO has refused a loan on the grounds that it does not finance private housing developments.

Martinsa-Fadesa said today that it has asked its creditor banks for an extension to the deadline for securing the loan until August 7, and is reported to be negotiating against the clock with banks and the ICO. If Fadesa does not get the loan, the company may be forced into voluntary administration to seek protection from its creditors.

Financial sources quoted in the Spanish press say that insolvency for Fadesa would be a “lethal” blow to the international reputation of all Spanish companies, not just Spanish developers, and make it more difficult for them to tap international investors in future.

Martinsa-Fadesa, which has a sales office in London where it sells projects such as Costa Esuri in the ‘Spanish Algarve’ (Costa de la Luz) and Mediterrania-Saïdia in Morocco, has admitted that its sales are down by 40% in 2008. Other projects that Fadesa has been selling to British buyers include Bellarotja (Costa Blanca), La Oliva Casas (Fuerteventura), and Sa Marina in Mallorca.


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