Spanish Real Estate forum - Spanish property - Estate agentsSpanish Real Estate forum - Spanish property - Estate agents

Richie · 02-23-2008, 12:37 PM

Promociones Habitat SA, the Spanish developer that broke terms of its loan last year, may refinance 1.6 billion euros ($2.3 billion) of debt this week after three months of negotiations, three of its bankers said.

La Caja de Ahorros y Pensiones de Barcelona is leading a group of 38 lenders that may provide new loans as soon as today, said the bankers, who declined to be identified before a public announcement.

Barcelona-based Habitat, which has offices in eight countries including Mexico and China, will pay interest of as little as 2.5 percentage points over lending benchmarks, the same as the rate on the debt that's being replaced.

Habitat, which borrowed to buy a unit of Madrid-based builder Grupo Ferrovial SA in 2006, needs the loan after violating terms of debt agreements by missing earnings and sales targets. The company, the biggest real-estate borrower to seek new financing as Spain's decade-long property boom ends, will agree to sell assets to pay part of the seven-year loans, the bankers said.

Full story on Bloomberg.com...

How on earth is a developer allowed to get this far in the red? Has the Spanish banks gone mad? 1.6 billion euros of debt!!!