2023-09-07 13:58:20
BarcelonaThe historic change of hands of Celsa due to a judicial decision has shocked the Catalan business world this week. A branch of the Rubiralta family, which created an empire from practically nothing, has seen the funds get the judge to choose their viability plan as the most suitable for the company and have kept 100% of the company The case is unprecedented and raises five questions about the process that culminated this week.
Why is the judge so decisive?
The resolution of commercial court number 2 of Barcelona is the first to be made in application of the transposition in Spain of the European principles of a law to speed up debt restructuring processes in companies in trouble. The key point is that the judge sets the value of the company below its total debt and this hands the company over to creditors. The decision is drastic because it involves the loss of 100% of the shares by the family that owned the company, which has generated controversy. But the truth is that it is an example of what the liberal world calls the rule of law (empire of the law, literally, but more commonly known as under the rule of law) as a key pillar of the economic system. Thus, a judicial decision takes precedence over any other political or social consideration due to the principle of the independence of the judiciary and the separation of powers. The judge himself remembers in the sentence that what he is doing is complying with the law. The business world often cries out against the legal uncertainty that occurs when politics invades the economic world, and this has been the opposite: the law above all else. It is worth noting that the judge’s decision was made in a court of first instance and, therefore, despite being a precedent, it does not have to mark the line of what other judges decide.
Can governments do anything about it?
The question has traveled this week in the corridors and offices of the administration and the company. The first impression, and despite the close relationship that the president of Celsa, Francesc Rubiralta, had cultivated for years with the Catalan and Spanish governments, is that no. “There is absolutely nothing that can be done,” explained sources from the Catalan administration consulted this week. It is a judicial decision adopted in compliance with the law in a case that did not admit of appeal. It is true that some voices still maintain that the State could avoid the change of hands and, in fact, the central government itself has already warned that they must ratify the decision. And some circles point out that “a government decree law could overturn it”. In fact, and according to ARA, it has been speculated in certain circles that the brake on this decision will enter the negotiations for the investiture of Pedro Sánchez, where Junts and Esquerra are essential.
What did the Rubiraltas do wrong?
Different first-level business sources consulted this week point out that the original sin of the Rubiraltas was to overindebt the company so much, with a liability of around 3,000 million, higher than the 2,800 million that, according to the independent expert, Celsa is worth. But the cases of heavily indebted companies that do not change ownership are frequent; here the key lies in the unwillingness of Francesc Rubiralta, heir to the empire and president of the company, to reach an agreement with the funds. At the time, the creditors proposed an alternative where in exchange for a payment of 500 million debt they would keep 49% of the company, not 100%, but Celsa refused to accept this option. Rubiralta’s aggressive negotiation took the case to court, which has seen more clearly the plan of the funds.
How do Celsa and the workers win?
If the judge has preferred the fund option, it is because he sees the plan they proposed as more viable. In essence, the company’s debt is reduced by 1,352 million euros and the terms of the rest of the debt are extended. “It was a company in a very compromised situation and now it will be a fully viable company,” financial sources point out. And both for the business project itself and for the workers, the better the economic situation of the company, the more guarantees they will have about its continuity. The workers, who at the time had positioned themselves on the side of the Rubiralta plan and against the fund, have kept a low profile this week and have limited themselves to remembering that among the fund’s commitments is the maintenance of the headquarters social in Catalonia and that of jobs.
What business will the funds do?
Business will be formidable. The Spanish bank, which had Celsa’s doubtful return credit, sold this liability for years to venture capital funds that could indeed assume this uncertainty. “Banking has been very tight because of Frankfurt,” says one financier, referring to the European Central Bank. Thus, the funds obtained this liability of 3,000 million at a price of around 500 million, and now they have a company valued at 2,800 million. All in all, the funds are on solid footing this week: they have recalled their commitment to the continuity of the project and have announced that the next president will be Rafael Villaseca, a heavyweight of the Catalan company, very well connected with the PSOE and with La Caixa. The main fear that is on the table is that the funds will sell parts of the company (Celsa has six large business units) to reduce debt, one of the priorities that the new owners have set. Also, funds, by definition, is about buying low and selling at a higher price; usually their permanence in the companies is between five and seven years margin. And that is why in many areas it is taken for granted that Catalonia, which lacks large companies, will see how Celsa, the fourth largest in the country by turnover, becomes a smaller company.
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