The biggest department store group in Europe, El Corte Inglés, has wrapped up a four-month process with six Spanish banks (Santander, Caixabank, BBVA, Banco Popular, Sabadell and Bankia) to refinance 3.8 billion euros out of its 5.0 billion euro debt load.
With the help of Morgan Stanley, the international company was able to extend the term on its debt to eight years, which is an unlikely and lucky break considering that FCC and Sacyr Vallehermoso are negotiating 3-year sindicated loans with their creditors.
Instead of using its 18 billion euros in real estate assets as collateral, El Corte Inglés was able to get favorable loan conditions with interest rates around 4 percent.
In addition to gaining a longer loan term (the debt must be paid off by 2021 now) and a reasonable interest rate, the refinancing agreement that El Corte Inglés reached with the six banks offers another big advantage: the group of banks that will refinance the remaining 1.2 billion euros will be obligated to take on the same loan requirements.
The restructuring of the debt signifies a major step forward for El Corte Inglés in the sense that it helps the company's balance sheet following heavy investments that it made in the purchase of the Windsor building in Madrid and opening new shopping centers in Córdoba, Tarragona and Badajoz. The company's success could increase if its earnings results look anything like they did in 2012. This report will come out next Sunday. We shouldn't forget that El Corte Inglés i sone of the main drivers of the Spanish economy that is helping to counter low domestic spending as it distributes its product and brand internationally.
