Celsa stumbles over the same stone of debt

Francesc Rubiralta has never shown much aversion to credit while he has been in charge of Celsa, the second largest Spanish steel company. 17 years ago he experienced firsthand how the family business group split in two, after his uncle José María became displeased with his father, Francisco, for the purchase of Fundia, a Finnish company valued at 123 million euros, behind his back. . Francesc’s uncle had opposed the operation, considering that it would represent excessive debt and accused his nephew, who was 28 years old at the time and had landed in the company after a training journey through consulting firms, of having made the acquisition on his own. .

Celsa was already a benchmark in 2005. He had taken advantage of the integration of the sector in Spain to acquire small companies and that year he earned around 2.8 billion euros. But the acquisition race was not yet over and in the following years the steel group that is today the largest Spanish manufacturer of long products for construction and with an important role in the production of wire rod for the construction sector was completed. engine. Growth between 2002 and 2012 was accelerated. Arcelor Mittal is hardly ahead of itself today in the steel sector in Spain, although Francesc, president of the company since the death of his father in 2010, has always defended that it is more than a steel company, it is a scrap metal recycling company, its raw material. Its turnover has skyrocketed to over 6,000 million euros, it has branches in different European countries and it has a workforce of close to 10,000 workers. But not only those parameters have grown: the debt is today a ball of 3,000 million that the creditor banks got rid of by applying large discounts (in some operations it was 70% and 80%) after various refinancings in a short time that seemed escapes forward. If they sold that debt it is because they saw its collection as complex.

Francesc Rubiralta, president of Celsa. Consuelo Bautista

This week, the opportunistic funds that bought it starting in 2017 have won the game in court after three years of discussions – or confrontations – with the company’s management: they will keep 100% of the company in exchange for only 1,300 million of the debt. The rest, up to 2.4 billion in debt, can be collected in five years. Rubiralta can only wait in case the Government refuses to authorize the takeover by the owners, which would open another path full of uncertainty.

In Catalan business circles there is a certain disbelief about the all-or-nothing policy that the family has played, which until the beginning of this year did not begin to consider the possibility of ceding part of the capital to its creditors in exchange for reaching an agreement. At that point it was already too late: the funds knew that the reform of the bankruptcy law opened a window of opportunity for them to keep 100% of the capital and that, if it did not go well, the game would continue to be played. All those consulted repeat the same thing: the company works well (it obtained a gross operating profit of 867 million in 2022) but its financial planning was failing and it needed to reduce liabilities. “If the funds were there, it is because they saw that it was a good project,” says Jaume Alsina, president of the Catalan Association of Family Businesses, convinced.

The same conditions for the funds

“I don’t know if Francesc Rubiralta has made a mistake in his strategy, but he is like his father: a force of nature and a fighter who is dedicated day and night to the company,” says a manager in the steel sector. The still president of Celsa is vice president of Unesid, the Spanish employers’ association, and a member of the board of the Círculo de Economía, in which he has not participated in the last three months. The company has declined to participate in this report.

The banks trust “in the new owners” – as a statement from the Ministry of Industry already defined them – and have already guaranteed them the same credit policies for 525 million euros with surveillance every 15 days that the group had had since November. . “Why do current managers have to do better and funds worse? “They want the money back,” says a veteran banker who has known the Rubiraltas for decades. The signing of the former CEO of Gas Natural Fenosa, Rafael Villaseca, to preside over the company has been understood as a guarantee for the future of the company as it is today: he gets along well with administrations, has a long career in industrial companies and It has never been characterized by the division of companies. These are the guarantees that the judge and the administrations precisely demanded: integrity of the business, headquarters in Spain and maintenance of employment.

The ruling is a painful blow for the family, which had an industrial benchmark in its hands, and a glancing blow for the large Catalan company, which sees how year after year it loses the family DNA that characterized it. Since 2005, with the sale of Panrico by the Costafreda family, Catalan industrialists have been undoing positions at a pace that has accelerated in recent years: from the Cirsa gambling empire, to the cava producers Codorníu and Freixenet, the automotive components manufacturer Ficosa or wedding dress manufacturer Pronovias. The latest case was that of Pastas Gallo. The big difference with Celsa is that it is precisely Francesc Rubiralta’s obstinacy for not giving up part of the capital that has ended up deciding the game.

The Minister of Business of the Generalitat, Roger Torrent, admits the process of exit of family capital from the industry: “There is a global dynamic from which it is currently very difficult to escape but, despite the fact that there are certainly large family companies that have become hands of foreign capital, many others have grown and have established themselves as models of success.”

Heavy indebtedness like that of Celsa, although without the seriousness that its judicialization entails, has also meant that the funds forced changes to the boards of directors or the replacement of top executives, as has happened in the listed companies Grifols or Cellnex.

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