"Celsa has left the ICU, but is still in the hospital." With this graphic expression, Rafael Villaseca defines the situation of the Celsa steel group, one of the main industrial companies based in Catalunya. The veteran executive ---who was the CEO of Gas Natural until 2018--- assumed the presidency of the company based in Castellbisbal (Barcelona) on December 1 after the creditor funds took 100% of the capital by converting 1,418 million euros of debt into shares. In an exercise of "maximum transparency," according to his own words, this Tuesday, Villaseca appeared before the press after an extraordinary general meeting of shareholders ---the first without the Rubiralta family--- in which the audited accounts for the 2023 fiscal year were presented. These are totally atypical results, loaded with extraordinary items, which have resulted in a net profit of 459 million euros. Revenue in 2023 decreased by 22% due to the fall in demand and steel prices, to 4,765 million.
Accompanied by Celsa's new CEO, Jordi Cazorla, Villaseca assured that the new management team found "a company that was bankrupt," so their efforts over the last four months have focused on "clarifying the situation," cleaning up the balance sheet, and knowing exactly what the starting point was to begin the reorganization and "lay the foundations for future relaunch." "Celsa has left the ICU, but is still in the hospital. We are already well on our way to achieving absolute normality. The foundations have been laid for the group to solve its problems and continue to be an industrial emblem of this country," highlighted the president, after pointing out that they will "not lack work." Their most immediate challenges are the approval of a new strategic plan, evaluating the possibility of divesting in some of the industrial assets or subsidiaries that Celsa owns outside of Spain, and the launch of a capital increase that will allow the incorporation of a Spanish industrial partner who will take a stake of around 20%.
This last measure, aimed at ensuring the Spanishness of a group considered strategic for the productive fabric, was one of the conditions imposed by the Government to greenlight the corporate operation that involved the entry of the funds and the total exit of the Rubiralta family from the shareholding. This transaction stems from the historic court ruling that on September 4 approved the restructuring plan proposed by Celsa's creditors, which involved capitalizing 1.400 million in debt in exchange for taking ownership of 100% of the group. This debt-for-equity swap process was executed on November 23, 2023, which allowed Celsa's financial liabilities to be reduced from 3.734 million to 2.316 million. After this operation, Celsa's capital is now distributed among some 20 international funds and financial institutions, including Attestor, Cross Ocean, Deutsche Bank, Strategic Value Partners (SVP), and GoldenTree.
Recovering 500 million lent to the Rubiraltas
According to the new CEO of Celsa, without this debt capitalization, the group would have closed 2023 with negative equity of 1,187 million euros. This figure is a consequence of the provisions and asset impairments—totaling 1,339 million—that the company has had to make to clean up its balance sheet and leave it free of qualifications in order to face this new stage. The impact of 936 million derived from several qualifications related to goodwill and non-recoverable tax credits stands out; and theprovision of 539 million that Celsa has had to record for a loan that the company granted to the Rubiralta family and that has not been repaid.This impact has necessarily had to be reflected in the accounts because the patrimonial companies of theRubiraltathey have suspended payments, butVillasecahas assured that Celsa does not give up on recovering this amount, but quite the opposite. "We do not give up at all on these amounts owed by the family; we will carry out all actions within our power to recover the 539 million," he stressed.As a consequence of all these impacts, in addition to negative equity of 1,187 million, Celsa would have registered losses of 918 million in the last fiscal year. However, the credit restructuring has allowed the group to close 2023 with consolidated equity of 326 million and a net profit of 459 million. Ebitda decreased by 50%, to 441 million (885 million in 2022), and turnover fell by 22%, with 4,765 million (6,100 million in 2022) as a consequence of the 6.5% drop experienced by the steel market in the European Union. "We are at the bottom of the cycle, but we expect a recovery in the coming quarters," said Cazorla, a Catalan executive who has joined Celsa from the British paper group DS Smith.
According to Villaseca and Cazorla, Celsa's accounts for 2023 are the first to consolidate the entire group of more than 60 companies belonging to the company. This consolidation has been possible thanks to the new team having brought order to the complex corporate structure that the previous owners had woven. Thus, several companies have been merged and now the multinational depends on a single holding company called Grupo Inversiones Pico Espadas. "For the first time, Celsa's accounts reflect the reality of the entire group and, also for the first time in its history, do not include any reservations from the auditor, EY," the new president asserted.
In these first four months of management by the new owners, Celsa has also proceeded to refinance its working capital or short-term debt, and has contracted the services of the consultancy firm Bain & Company and the investment bank Citi Group. The objective of Bain is to help the group develop a new strategic plan that is expected to be launched throughout the second half of 2024 and that will mark the path the steel company must follow to succeed in this new stage and be able to proceed with the repayment of the substantial debt of 2,316 million that remains on its balance sheet. For its part, Citi has initiated a process of analysis of Celsa's foreign subsidiaries "with the aim of evaluating possible asset rotation options." The Barcelona-based company has an industrial presence in Spain, France, the United Kingdom, Denmark, Finland, Norway, Poland, Sweden, and Ireland, countries where it generates direct, indirect, and induced employment of 70,000 jobs.
New Celsa board of directors
At this Tuesday's extraordinary general meeting, Celsa approved the appointment of a new board of directors, which involved the hiring of four independent professionals of recognized prestige: Hilario Albarracín, Elena Guede, Juan José Nieto and MarioLonghi. Albarracín is the former president of KPMG in Spain, Nieto was a senior executive at Telefónica,Longhipresided over the multinational steel companyUSSteel, andGuedeis a director of the Irish cement group CRH.Jordi Cazorla is also in the midst of creating a new management team after six senior executives from the Rubiralta era left the company. The new management committee will have seven members. In February, the hiring of Borja García-Alarcón (formerly Indra and Enagás) as CFO was announced, and the company is finalizing the incorporation of a new commercial director, a head of the legal department, and a new head of strategy to implement the plan to be developed with Bain.
Finally, Villaseca has assured that among Celsa's objectives "is not to propose a reduction in the number of employees" and has considered it "premature" to talk about the process of incorporating an industrial partner, although he stressed that it will be done "in an orderly and transparent manner" starting in June so that all potential interested parties are on equal terms. Among the companies that could consider investing in Celsa are Gonvarri, Sidenor, Cristian Lay, and Megasa.
Celsa's main differentiating element in the market is that the steel it produces is made from scrap recycling and not from the transformation of new iron ore. This makes it a company based on the circular economy and the largest steel recycler in Spain and second in Europe. Specifically, in 2023 it manufactured 5.6 million tons of steel that contained 97.4% recycled material. Its goal is to achieve 98% circularity by 2030. In total, the company has 120 work centers, 7 steel mills, 12 rolling mills, and 48 recycling plants. Thanks to this industrial fabric, it currently ranks second in the European ranking of manufacturers of long steel products, destined for sectors such as construction.
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