Spain: State holding company SEPI has agreed to provide rolling stock manufacturer Talgo with a high-interest convertible loan of approximately €150 mln. The terms of the loan allow for future conversion into Talgo shares.
According to Spanish business daily El Economista, the funds will be transferred to outgoing shareholder Trilantic, an investment fund. In February, Trilantic agreed to sell its 29.77% stake in Talgo to a consortium comprising steelmaker Sidenor and government and financial entities from the Basque Country autonomous region.
The SEPI loan is expected to be treated as a capital contribution, enabling Talgo to maintain the required level of solvency to participate in high-speed train supply tenders. The structure of the loan will also enable Talgo to comply with European Commission restrictions on state aid.
Talgo reported record revenue of €669.2 mln in 2023, but posted a net loss of €107.9 mln and net financial debt of €403.8 mln. Results were impacted by a €116 mln penalty, exceeding 17% of annual revenue, imposed by national operator Renfe for significant delays in the delivery of Avril high-speed trains.
El Economista reports that the parties have agreed to a seven-year deferral of the penalty payment. After 2031, the penalty will be converted into long-term interest-bearing debt, preventing any immediate impact on Talgo’s liquidity. However, the company must still complete the refinancing of nearly €400 mln in outstanding debt, with negotiations currently underway between Sidenor, the Spanish government, and creditor banks.
