State sells Efacec to DST but maintains a 25% stake

The Council of Minister approved the sale of the state’s stake in Efacec to the Portuguese group DST, the secretary of state of finance announced on Thursday. However, as the operation will be carried out with a reduction of the share capital and subsequent capital injections, the state will maintain a 25% stake in the company, João Nuno Mendes explained. The official also gave assurances that “the final draft approved allows for the state’s interests to be safeguarded considering the current financial situation of the company.

“After signing the sale contract, there will be a period of restructuring of the company’s equity, which may result, at this stage, in a stake of up to 25% in Efacec resulting from the capitalisation by Parpública,” he explained at a press conference.

Efacec will start by reducing its capital and then the state will increase it by €60 million with quasi-equity financial instruments. A €81 million capital increase by the new shareholder will follow this operation, according to João Nuno Mendes. Finally, at pre-closing, Banco de Fomento will advance with a refinancing facility. A facility that, as ECO previously reported, will refinance the company’s debt by €100 million, at 25 years, with an interest rate of 1.25%, convertible into non-voting preferential shares.

This funding from the Banco Português de Fomento, “will allow the Portuguese state to recover a number of state guarantees that had been provided over these two years, to the tune of €115 million,” said João Nuno Mendes.

The way the operation was designed, the secretary of state “provides a secure framework that the company will be able to live by its own means”. “The state’s role ends here,” the secretary of state repeated several times, although the sale to DST still has to go through the sieve of Brussels, namely of the Directorate-General for Competition (DGComp) for analysis under the state aid regime. The aim is to assess whether this operation does not configure the subsidisation of DST in the takeover of Efacec.

Portugal’s government also guarantees having “done everything” to maintain jobs in the company and that if the state had not acted, Efacec would today be an insolvent company and would have already gone into liquidation.

Despite the prime minister having classified DST’s proposal as “unacceptable”, the Secretary of State guarantees that the “process was competitive” and that the “final draft approved” in the Council of Ministers contains “changes to the best and final offer (BAFO)” presented by DST “that allow the State’s interests to be safeguarded, taking into account the current financial situation of the company, which has worsened in the last two years,” Nuno Mendes said.

“Everything was done so that the best possible deal was done,” Nuno Mendes guaranteed, stressing that “there are significant numbers of state involvement” and that the 19 months that have passed since nationalisation were “the time needed” to meet deadlines and ensure competition”. The secretary of state thus rejected the idea that there were delays in the process.