Green light to cancel the debts of Expo, Plaza, Platea and Plhus

The Council of the Aragon Regional Government gave the green light for a financial transaction within the public sector of Aragon,through a specific draft bill which, if passed, will try to gather the support of all the parliamentary groups in the Aragon Parliament. This law intends to cancel the debt transactions in force for the companies Expo Zaragoza Empresarial, Plaza, Platea and Plhus, integrated in the Aragon Public Business Corporation. The Law will authorise the Treasury and Public Administration Councillor, Fernando Gimeno, to take out long-term credit transactions for the maximum amount of 238, 560. 000 euros The final amount will be transferred from the Community’s budget for this year to the aforementioned companies as future capital increases. The total authorised sum does not reach the 248 million of the accumulated debt by these companies, falling short by 10 million. These companies have difficulty to cash their assets and thus deal with their financial obligations from their own resources, which they cover with contributions from the Aragon Government. The remaining shareholders have not contributed in recent years.
Nevertheless, the Aragon Government forecasts that the final need for credit over the total authorised amount will be reduced by 24 million euros, through an additional transaction of transfer of assets from Plaza. This evaluation is accepted by all creditors and the Administration Council of the public company, and will easily cover that amount. The remaining 214.9 million planned to subscribe from the 238.5 million expected to be authorised by this law, will be transferred in the following manner, in accordance with the Corporation’s forecasts: a maximum of 47 million to the single partner subsidiary Corporación Suelo y Vivienda de Aragon (SVA), so that in turn 36.9 million can be transferred to Plhus and up to 10.1 million to Platea; a maximum of 109.6 million to Expo Zaragoza Empresarial; and up to 58.1 million to Plaza. The Huesca Platform will also receive another amount to deal with accrued interests on the date the loan is cancelled, which on 30th July amounted to 1.2 million euros.
The transaction, already agreed with several banking entities, will practically cover the entire ongoing debt of the Business Corporation, which will be amortised over a longer period (between 8 and 12 years, with an average of 8.4 years) and above all, at an interest rate 3.42 points lower, since it will be reduced from the current rate of 4.66% to 1.24%. This way, the financial burden on the Community will be substantially lightened, and will earn a margin for drafting the budgets for 2016. More specifically, the Corporation’s financing requirements for these public companies will be reduced next year by 51 million euros (just over 40 in amortisation and 10.8 in interest); which the Aragon Executive will be able to assign to other items. In interest along,, the reduction in rates will mean a saving of 7.4 million euros a year, according to the Business Corporation. This transaction will permit relaunching the public sector in Aragon with healthier accounts and a renewed image of solvency, at a favourable time of the general recovery of the economy. Offloading economic burdens will make the commitment to logistics by the Aragon Government more attractive, which, as reported at the time, will see Plaza as the headquarters of the business conglomerate and regional organisations dedicated to marketing and managing logistics, industrial and business land belonging to the Executive.
In this sense, the first step to relaunch this plan was to appoint Francisco de la Fuente, former managing director of the Zaragoza Maritime Terminal (TMZ) as manager of Plaza. The aim is to unify the strategies of both centres to become the logistics driving force and thus reinforce the Community’s strategic commitment. Principle of financial prudence With this financial transaction by the Business Corporation, compliance with the Organic Law passed in June modifying Financing of Autonomous Communities Law (1980) and the Budget Stability Law (2012) is also achieved, establishing that “Autonomous Communities must ensure the application of the principle of financial prudence in their public sectors as a whole”. On 18th March the Aragon Government had accepted the terms of the credit line formalised with the Official Credit Institution (ICO) charged to funds for financing the Autonomous Communities. A few days earlier, on 13th March, the Council of Ministers authorised formalisation of long-term loans to Aragon and the issue of public debt for the maximum amount of 238.5 million euros, for re-financing existing debt transactions that could not be covered by the Financial Facility Fund. And on 27th July, the Secretary General of the Treasury and Financial Policy authorised the transactions within the terms of financial prudence for the amount of 238.5 million. This is exactly the amount that will be authorised by the Councillor of the Treasury and Public Administration, Fernando Gimeno, if the Aragon Parliament grants approval, that will be agreed through one or more long-term credit or loan agreements to re-float the public business sector in the Community.