Government tries its final chance to sell Efacec to DST

The government is trying a last-minute comeback to sell Efacec to the DST group. After the unsuccessful negotiations for the reprivatisation of over 71% of the industrial company, a fact confirmed by António Costa himself during the electoral campaign, the Minister of Economy, Pedro Siza Vieira, and the Secretary of State, João Nuno Mendes, kept the door half-open on the process, which is dependent on the Banco de Fomento’s involvement in Efacec’s refinancing to an amount of around €100 million and under conditions which may constitute a debt forgiveness.

ECO sent questions to the mentioned ministries and the Banco de Fomento a week ago, but did not receive any reply. According to information from two sources familiar with the process, the government, through Parpública, is negotiating with DST a refinancing line to Efacec promoted by Banco de Fomento for €100 million at 25 years, and with the possibility of conversion into capital by decision of the group led by José Teixeira. But there will still be disagreements over the cost of this operation. DST will not accept over 1.35% interest over the period, while Banco de Fomento has presented a proposal for an initial interest of 1.25% and a maximum ceiling indexed to the company’s profitability.

The solution will not be consensual between the Ministries of Economy, which defends the model proposed by DST, and Finance. Minister João Leão has even rejected this solution because he considers that there is the risk of it being considered State aid according to the rules of the European Commission. But the possibility of a decision from the Cabinet Council this week is not ruled out.

As ECO revealed in successive articles, DST considers Efacec will not be viable with a debt level above €90 million, when today it has a debt of over 200 million, namely due to another recent financing of €40 million with State guarantee. And demands that the government will ensure a debt reduction. In recent weeks, several solutions have been on the table, always with the involvement of Banco de Fomento, from perpetual zero-rate loans to refinancing models and the respective cost offset by a pre-sale recapitalisation operation of Efacec.

The fact is that the reprivatisation process has been going on for over a year, piercing all calendars. The last one, announced by Pedro Siza Vieira, indicated the conclusion of the process at the end of 2021, which did not happen. And in the meantime, the results have deteriorated, also because of Covid. As ECO revealed, the company led by Ângelo Ramalho had a negative net result of €62.7 million and a negative EBITDA of €31.8 million (when the target was set for positive €22 million). The numbers are provisional and the final version should be finised in the coming weeks.