The recent history of Duro Felguera is not without crises. Founded in 1858 as a steel and coal company, the conversion to engineering already led it to flirt with bankruptcy in the 80s and 90s. The transformation led it, however, to break record results in 2012. What happened, then, since then for the company to accumulate one bailout after another and financial problems to pile up on the table in just over a decade? A history of bad decisions and conflicts around half the world They have the answer.
In 2012, the company boasted profits of 116 million euros and sales of 916 million. In the heat of these figures, the organization sneaked into the rankings of the companies with the best dividend on the continent, with a profitability of 7% and up to 65% of the profit distributed to its shareholders. At the head of the listed company was Ángel del Valle, who seemed touched with a wand: he chained new projects and had the approval of the shareholders.
From that time are the Termocentro project in Venezuela, worth 1,500 million euros, the combined cycle plants in Brazil for Grupo Bolognesi Energia, worth 800 million euros, or the mining project in Canada by the Australian company Ausenco, of almost 1,000 million euros. These macroprojects seemed to take the listed company to the next stage: capable of looking down on anyone due to the fall of the Spanish domestic market.
However, the sector became increasingly competitive. And Duro Felguera failed when it came to managing this international expansion. If at the beginning of the decade the contracts were piling up, in the middle of the decade the news was the non-compliance with budgets, the cost overruns in each of the assigned works and the litigation that led the firm to lose 68.8 million euros and in 2015.
For example, the company saw 88 million in guarantees executed in the construction of an iron ore processing plant in Australia – the so-called Roy Hill project – and suffered significant cost overruns in the Central Vuelta de Obligado (CVO) project in Argentina or the Carrington project, in the United Kingdom, to erect an energy plant.
First rescue: bank refinancing
In 2016 the losses were maintained -despite being cut to 18 million-. Nevertheless, The banking risk departments had Duro Felguera in their sights: the debt already exceeded 250 million euros and the conversations with the pool bank made up of Bankia, BBVA, CaixaBank, Banco Popular, Banco Santander and Banco Sabadell were already heading towards a tough refinancing.
And if that were not enough, in the fall of 2017 the National Court admitted the complaint of the Anti-Corruption Prosecutor’s Office against Duro and Ángel del Valle for alleged bribes to high officials in Venezuela and money laundering in order to obtain contracts in Caracas. The conflict in the country continues to this day: the Prosecutor’s Office requests a fine of 160 million for the organization, which still has 120 million euros to collect in the country for the Caracas project delivered in 2012. This debt was the argument used José Luis Ábalos to receive Delcy Rodríguez, vice president of the country, at the Madrid Airport in 2020.
The procedure was the finishing touch to From the Valley in a campaign (2017) in which engineering lost 254 million euros. The president resigned and the bank agreed to a haircut of 233 million to leave a debt that exceeded 300 million at around 85 million euros. The outing even ended in a complaint for unfair administration and misappropriationpresented in 2020 and which joined the Venezuelan judicial front.
In addition, the organization had to sell assets such as its corporate headquarters in Madrid and Gijón. The pact, however, caused the entities to no longer want to hear or talk about lending more capital to the Asturian firm.
Duro Felguera also committed to undertaking a capital increase of 125 million euros. He did it. Despite the fact that its reference shareholder, Inversiones Somió, owned by Asturian businessman Gonzalo Álvarez Arrojo, did not attend the call. Yes, TSK did it, according to what the press published at the time, a historic rival of Duro Felguera that came to have just over 2% of the shares.
The new stage began to bear the seal of José María Orihuela after a brief period with Acacio Rodríguez as chief executive. Orihuela had to theoretically pilot the rebirth of a company that already had a financial situation on the way to normalization. And on a positive note, it closed the 2018 campaign with profits of 99.4 million thanks to having won the award in Australia for the Roy Hill project.
But the engineering sector is very capital intensive and to win projects you need guarantees that banks were wary of lending again after having already left more than 200 million in losses. The entities demanded industrial shareholders with a vocation for permanence. A door to knock on if things came wrong again.
Second rescue: the State
And then the pandemic broke out. Works were stopped with a project portfolio already declining due to the different crises of recent years. The disputes, furthermore, continued. With losses of more than 170 million, the company leadership saw a way in the Sepi Solvency Support Fund for Strategic Companies to save your bills. He requested up to 120 million euros in an operation that is now called into question for two reasons: the backpack of financial problems that the organization had already been dragging for at least five years and the debate when it came to classifying Duro Felguera as strategic for the country.
The Government saved the second discussion with the defense that Duro Felguera was strategic for Asturias. However, it is clear that its economic weakness did not come only from the coronavirus. The firm also has open litigation with the Tax Agency for more than 150 million euros after receiving corporate tax inspections.
The rescue was finally approved. Along the way, the company had to adjust its labor structure -in 2022 it presented an ERE for 180 people- and find investors who would support the State project. To do this, Sepi appointed Jaime Argüelles, from Ence, as first executive. It was he who had to lead this new stage.
And the ship seemed safe after years adrift after the operation. The company made money in 2021 and 2022 – although it is true that it was due to financial adjustments and the ebitda remained negative – and Argüelles found the Mexican Grupo Prodi that injected 90 million euros in a capital increase undertaken last year through two companies, Prodi itself and Mota-Engil México, both under the final control of José Miguel Bejos .
The losses of 21.9 million euros in 2023 were read as a stone in the path of transformation of the company, which managed to increase sales by 140% to 281 million and an avalanche of contracts was promised, especially in Mexico, thanks to the influence of its new shareholders. Part of the red numbers also came from deviations in a work for Tata Steel in the Netherlands. It was music, yes, that was already playing.
If you looked into the accounts, there were reasons for concern. Duro Felguera admitted that he had disputes with clients that could reach 700 million eurosbut only had provisions of 59 million.
At the gates of the third rescue
It was not until the end of the first half of 2024 that it became clear that the situation was worrying again. Losses increased to 26 million and cash fell from 109.8 million to just 45.3 million. The more than 200 million obtained between Sepi and Grupo Prodi had been dissolved between the cost of the projects – especially impacted by the generalized inflation of the last two years – and a major profitability problem in the Duro Felguera Calderería Pesada workshop, in Gijon.
Argüelles presented his resignation after the high-profile departure of the financial director, Raúl Sánchez, just three months after being appointed. Eduardo Espinosa took command. Five CEOs and six financial directors in ten years. AND As a welcome gift, he came across a claim from Sonelgaz for 413 million for non-compliance in the construction of a power plant in Djelfa (Algeria). Given the news, the CNMV forced it to make a provision of 100 million, which plunged the company into negative net worth and forced it to declare pre-bankruptcy with creditors in search of a solution that, at first glance, only happens because Sepi exchanges the credits for shares and becomes the reference shareholder, with the consequent losses for the public coffers. The bank has already said actively and passively that it will not put more money – or guarantees, practically – and it seems difficult for Mexicans to want to bury more money in the project.
In the bedroom, they also expect litigation in Dubai, Chile or delays in Romania that could raise the legal bill for Duro in the coming months.
LinkedinBeloud
#record #numbers #rescues #chronology #decade #Duro #Felguera #horrors
