Duro Felguera entered a refinancing and restructuring phase last November, reaching an agreement with its creditor banks to reorganize financial debt and secure additional liquidity. The arrangement includes a line of credit totaling 36 million, with six lenders involved, plus a one-year grace period on interest payments and a deferral of 5 million in depreciation until October 30, 2023. Following this agreement, the company received financial support: a 120 million rescue package from the state and an additional 6 million from the Principality. The company attributed these developments to unforeseen external circumstances not related to its management, including prolonged Covid-19 effects, material and energy shortages, and a commercial diplomatic dispute between Spain and Algeria. The dispute has slowed the client’s business at the large Djelfa combined-cycle power plant, which is 70% complete, and caused delays in collections due to disruptions in cross-border banking transactions. The project and the bulk cargo handling system at the Bellara steelworks were nearly finished at that point.
Out of the 36 million requested, 30 million was raised with a 70% public guarantee from ICO. The risk to the banks stood at 15 million, equaling the amount the company had already repaid to banks since the November agreement, effectively resetting the financial risk position for lenders to the starting point.
In light of demand for a standard financing operation, the company and others in similar situations are considering a range of actions to anticipate events in the evolving international context. The company’s CEO, Jaime Argüelles, explained this to staff during a pre-scheduled virtual meeting, with several witnesses confirming the briefing. Sources indicated that Argüelles disclosed the new request to the banks. The aim is to secure funding to “equip the company for new projects without jeopardizing cash flow.” At present, about 44 million remained available, and continued reliance on this financing could leave the company with operational cash only by year-end. Argüelles noted that Duro Felguera has a pending Algeria receivable of 10 million and is near signing contracts valued at 200 million across various markets, with expected invoicing between 300 and 500 million for the year. He urged staff to contribute significant effort, stating that the company would “lead the way.”
People familiar with the matter said the firm is in advanced talks with investors and is considering two or three strong options. An extraordinary general meeting is expected to be convened before a date is set for the entry of new capital.
The Minister of Industry, Henry Fernandez, announced at the board that international circumstances have added to Duro Felguera’s challenges after the company’s rescue. Management, workers, and administrations were urged to understand the situation and take necessary steps to reinvigorate the company. Fernandez emphasized that ongoing efforts aim to return the company to stability, though he cautioned that the group remains in a danger zone. A member of the opposition group criticized the growing number of directors and their compensation, highlighting political tensions in the discourse around governance.
Duro Felguera’s stock price closed trading down on the previous session, reflecting investor anxiety amid the refinancing process and the broader macroeconomic headwinds affecting the sector. (Source: company briefings and market reports)