ICA Exits RCO

ICA has agreed to sell its position in the Red Carreteras de Occidente (RCO) road concession to partner Goldman Sachs for MXP5.07bn ($379m), it says. The unloading of the 18.7% stake comes as the Mexican builder sells various assets in order to improve its liquidity position as its project backlog stalls. It will use proceeds to repay short term debt. “This is the result of a competitive process started one year ago,” ICA CFO Victor Bravo says in a conference call. He explains the deal comes after ICA examined several alternatives for the asset, for which ICA has fulfilled its construction obligations and represents only a “financial investment” going forward. The deal comes at about 14.1x 2012 Ebitda, which Bravo calls “comparable” to the industry standard, and gives ICA a gain of MXP700m over the book value. The transaction should leave Goldman Sachs with a 70% stake in the 750km Mexican road network, with the remainder held by owners of RCO’s certificados de Captial de Desarrollo (CCDs). ICA will continue to provide services to the concession. The deal is subject to government and regulatory approval, and is expected to close in Q3. RCO is a concession won in 2007 by ICA and Goldman Sachs, and popularly known as Farac at the time. ICA is scheduled to raise more than $300m through next week’s sale of its shares in airport operator Grupo Aeroportuario del Centro Norte (OMA). The RCO sale should knock out a third of ICA’s corporate debt, according to Monex, with the OMA divestment taking out another 30%, leaving ICA with 8.9x net debt/Ebitda, down from 11.6x in 1Q 2013. RCO, meanwhile, is planning a reopening of its domestic 2032 ABS, looking to raise up to MXP1.8bn. It raised MXP8.12bn through the original toll-revenue securitization in Mexico’s domestic market last year, and in March brought the cross-border markets a first-of-its-kind MXP-denominated bond secured by toll road assets, raising MXP7.5bn.