According to a Reuters report this morning, Spanish real estate company Reyal Urbis have reported this morning reaching a deal with creditors to refinance debt of 3.006 billion euros ($4.05 billion). In a statement to the stock exchange regulator, the firm said it had obtained two new credit lines which gave the company "the necessary liquidity for its operative management.
The new deal refinances two syndicated loans signed in 2005 and 2006 in addition to other loans and debt issues, said the company. Under the new financing terms, the company has postponed its first payment on the debt until October 2011 and signed up to twice-yearly payments after that date until 2015, when it will have to pay off the remaining 40 percent of the debt.
Reyal Urbis said it had provided additional debt guarantees against stakes, shares and mortgages. Like other Spanish real estate companies, Reyal Urbis is facing increasing pressure to meet growing debt payments as its revenue shrinks and asset values drop in Spain's property crisis.
One of Spain's largest developers, formed through the merger of Urbis and Reyal in 2007, Reyal Urbis said it had net debt of 5.5 billion euros when it reported its first-half results.
So basically, we are displacing the problem forward to 2011, which promises to be a very complicated year indeed if many more developers are able to get similar refinancing deals following the recent collective bank bailout. Obviously by that point we will not only have all the existing debt to think about, but also all the additional interest charges incurred in the meantime.
Edward Hugh is only able to update this blog about once a month at the moment, but he does have a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.