Shares of OHLA plummeted by 8% on Monday at around 11:00 a.m. on the Stock Exchange, following the news that they must pay 39.8 million euros in guarantees to Kuwait due to an arbitration regarding the construction of a road in that country, in a 'joint venture' with the Italian company Rizzani de Echer.
Consequently, the company's cash flow will suffer this setback, although a few weeks ago, they obtained a favorable ruling in another dispute, in that case, with a positive balance of around 100 million euros for a metro project in Qatar. Similarly, the core of this conflict in Kuwait is still in court with a potential positive balance of 300 million euros.
The company's shares have been impacted for a week by the arbitration outcome in Kuwait, due to rumors prior to the ruling last Friday already pointing to an unfavorable outcome of the appeal filed by the joint venture.
Since last Tuesday, the stock has dropped by 20%, and today it is trading at 0.43 euros, representing an 8% decrease compared to last Friday's closing, which could not be offset by the award of a new contract in the Czech Republic.
NEW CONTRACT IN THE CZECH REPUBLIC
Specifically, a consortium led by OHLA along with Hochtief --a German subsidiary of ACS-- and the Austrian company Swietelsky will build an intersection between highways D1 and D2 in Brno for around 130 million euros (for the entire consortium) with construction starting in the fall of 2025, for a period of 840 days, according to information from the Czech Ministry of Transport.
The stock has also been affected by disagreements in the new board of directors, still led by the Mexican brothers Amodio, but with new shareholders like José Elías (Audax) joining after the recent capital injections of 150 million euros.
Industry sources explained to Europa Press that there are two stances regarding the issuance of the planned 50 million euro convertible bonds: the Amodio brothers do not want the weight of minority shareholders to be diluted, so they prefer the issuance to be directed to 100% of shareholders, as opposed to the new investors who lean towards preferential subscription rights.
However, the bond is an additional option, and the company currently does not have an immediate need to use it, as it has sufficient cash reserves close to 100 million euros to cover the payment in Kuwait.
BOARD OF DIRECTORS REVIEW
Furthermore, the day is also marked by the possibility that the Spanish company's board of directors will review "the suitability" of all members of the governing body.
In particular, this review of the governing body members, requested by OHLA's Appointments and Remuneration Committee (CNR), mainly focuses on the company's CEO, Tomás Ruiz, "who is facing several legal cases in Mexico," as reported by 'El Confidencial' on Monday.
This committee has requested a suitability report to determine if Ruiz, appointed CEO in October 2024, "meets the requirement of not having any pending criminal cases that could affect OHLA's reputation," these sources told the digital newspaper, revealing that the company has also filed an insider trading complaint against a "close advisor" to José Elías.