Government prepares alternative plan B for Efacec’s sale

  • ECO News
  • 4 January 2022

The government wanted to conclude the sale of Efacec by the end of 2021, but now admits to keeping hold of the state-owned company.

The government is already working on a plan B, an alternative to the reprivatisation of Efacec, which involves keeping the company within the Parpública universe, to be restructured and privatised later. After weeks of negotiations with DST, the only candidate for the purchase of the industrial company, there are still differences of opinion over the refinancing and capitalisation to be carried out by Banco de Fomento. Less than a month before the parliamentary elections, the possibility of the government giving up the sale of Efacec has gained strength.

Officially, neither the Ministry of Finance nor the Ministry of Economy answered ECO’s questions, but the promise of a decision on the re-privatisation by the end of the year failed. Negotiations continued at the beginning of the year, but differences remained and, according to two sources, contacts between the Ministry of Economy, the Banco de Fomento and the DST revealed that there was little confidence in an agreement on either side. As ECO revealed first-hand, at stake is, in particular, a €140 million line, with a grace period for capital and interest, to allow the reduction of Efacec’s debt to €90 million, the ceiling required by DST according to the company’s historical operating results.

The final decision may be announced later this week, and if the failure of the sale of Efacec is confirmed, the alternative plan B requires negotiation with the European Commission and the Directorate General of Competition, under the state aid regime. Efacec would remain state-owned, a new executive board would be appointed to conduct a restructuring for later sale on other terms.

The decision to reprivatise Efacec should have been taken in the first quarter of 2021, but the process has been slipping with the consequent deterioration of the company’s accounts. The Minister of Economy guaranteed several times that the decision would be taken by the end of the year, but in the last week of December, the Minister of Finance said that the negotiations were still ongoing and without a defined deadline. Now the process seems to have ended. At least for now, because Siza Vieira has also stressed that “the state has no vocation for managing industrial companies”.

“If this proposal does not materialise, the company must remain in the hands of the state, and this will not be the best way for it to function, given the challenges it faces,” Siza Vieira told journalists on December 2.

The company has already received a new breathing space after a new loan of €45 million was signed to guarantee the company’s operation while the reprivatisation process was not concluded.

Caixa Geral de Depósitos, Millennium bcp, Novobanco and Montepio were the four institutions that make up the new banking syndicate that lent the company a further €45 million, Siza Vieira confirmed to ECO. The Banco de Fomento guaranteed 80% of the value of the loan through the Covid-19 Economy Support Line for exporting companies in industry and tourism, with the allocation of €1.050 million.