Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Spanish steelmaking group Metalúrgica Galaica SA (Megasa) has tabled a EUR185-190mn bid for 100pc control of the Gallardo Balboa Group (Gallardo) from US investment firm Kohlberg Kravis Roberts (KKR), which took control of the business, according to local media reports.


On July 5, Gallardo Balboa’s works council selected Grupo Industrial Cristian Lay’s EUR120mn offer as their preferential bid, given that the company guaranteed all workers at all sites across Spain would be retained and it would not scrap the Gallardo brand.


That said, Gallardo’s works council will now reconvene on July 9 to discuss the details of Megasa’s offer, which is thought to comprise of EUR100mn to pay down a large portion of its outstanding debt owed to Santader, BBVA, and Caixabank and EUR30mn for modernization.


After failing to secure state loans, KKR entered Gallardo into “pre-bankruptcy” in late June, a legal tool that provides a four-month period to reach an agreement to refinance its EUR150mn in debt; potentially guaranteeing its future commercial viability.  


KKR acquired control of Gallardo in November 2019, when it made a debt-for-equity swap due to the company’s inability to comply with the required financial ratios derived from its refinancing agreement in 2014.  


Megasa has an installed steelmaking capacity of more than 3mn mt and operates electric arc furnaces in Narón and Zaragoza that have the capability to produce a wide range of long steel products including rebar, wire rod and electro-welded fabric.


Gallardo operates operates eight steelmaking facilities across Spain including electric arc furnaces and re-rolling mills, which can produce rebar, corrugated steel bars, electro-welded meshed drawn wires, galvanized sheet, structural sections, and some tubular goods.


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