Spanish industrial group Grupo Industrial CL announced July 11 it has reached an agreement with US fund KKR to buy 100% of Grupo Gallardo Balboa, an Extremadura-based holding company for various steelmaking corporations that makes corrugated steel, for theequivalent of Eur145 million ($164 million).
The steel group will be absorbed into Grupo Industrial CL which owns a gas distribution network as well as retail cosmetic and packaging businesses and has recently moved into the renewable construction and maintenance business.
The offer means CL will take on financial obligations of Eur145 million, which includes a Eur70 million capital increase plus the existing credit lines of Grupo Gallardo Balboa.
The company also said it will immediately inject Eur30 million to guarantee purchases of raw materials, maintain production at all of Gallardo’s sites and guarantee payments to 100% of its suppliers. Grupo Industrial CL also said it will retain the existing workforce at Grupo Gallardo.
CL said it plans to carry out an industrial plan to reinforce Gallardo and make it into a reference for the European steel sector.
Grupo Gallardo owns production sites with 1.5 million mt of annual smelting capacity and 2.8 million mt/year of capacity for steel products.
“Following the COVID-19 crisis, we are certain that Extremadura and Spain need to back a reindustrialization plan to reduce our dependency on Asian markets,” said Miguel Angel Leal, CEO of CL’s Industrial Division.
The purchase fits in with the company’s strategy of applying its management methods to industrial groups that are in difficulty but have a market and a future, he said.
Balboa announced June 24 it was close to sealing a deal with an industrial partner and an agreement with financial groups to restructure its debt, after previous debt issues led to a takeover by US fund KKR in November 2019 after the companies worked together since 2014 alongside creditor banks to reduce Gallardo’s debt and sell off non-steel assets.
The offer had support from the regional government of Extremadura where CL is based and by Grupo Gallardo’s works council.
— Gianluca Baratti