One of Spain's largest developers, Martinsa Fadesa, is to file for voluntary administration after failing to secure a refinancing agreement earlier this week, making it the largest listed company in the country to have taken this course of action.

Trading in the company's shares had already been suspended after newspaper reports on the weekend suggested the developer would not be able to renegotiate its debt. As a consequence of the report, shares fell to their lowest price since it listed early last year.

In an official statement, the firm said that the move to file for voluntary administration was triggered by its failure to renegotate a €150million loan and had tried to avoid this course of action by asking creditors to extend its deadline until early August.
"Filing for voluntary administration is the best way to avoid aggravating a crisis situation that could become irreversible and have serious repercussions on creditors and all shareholders' interests," said a spokesperson. "The company, along with its administrators, will from now on focus in revenue-generating, through the sale of assets and land management and restructuring the company so the project can be revived."

Martinsa Fadesa said that it would look to pay off its main creditors, Caja Madrid, La Caixa, Ahorro Corporacion and Morgan Stanley as soon as possible.

A spokesperson sai that staff had yet to receive any official instruction and were getting their information through media outlets.
The developer is believed to have a total of €5.2billion worth of debt, while its assets have been valued at €9.7billion, down from €13billion this time last year - as the company sold stock to relive its financial burden.

According to estimates, the number of companies seeking protection from their creditors has risen to 1,010 during H1 2008.

Courtesy of www.oop.org.uk