The shareholders approve the formation of Ferrovial-Agroman, the Spains largest construction company

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The shareholders approve the formation of Ferrovial-Agromán, the Spain´s largest construction company Agromán´s AGM today approved the formation of Ferrovial-Agromán, S.A., effective retroactively beginning on 1st January last. The new Company Ferrovial-Agromán, S.A., from the moment of its creation, became the largest Spanish construction company with overall sales totalling 358,000 million pesetas, in 1998, and with a business portfolio of 630,000 million pesetas, as of 31st March, 1999. In his speech to the shareholders, Santiago Bergareche, Chairman of Ferrovial-Agromán, S.A. and Managing Director of Grupo Ferrovial, emphasised that the operation is "extraordinarily relevant and positive for Agromán´s shareholders", since "they will benefit from a situation of profitable growth in an ever-increasingly competitive market in which size and financial strength are the critical factors." While the Company was created today, the details of the operation will not be finalised probably until the end of July. Ferrovial-Agromán has been established by the partial split of Ferrovials construction activity and Agrománs integration into Ferrovials construction activity. In addition to being approved today by Agrománs AGM, Ferrovial, S.As AGM, also endorsed it. It is estimated that the cost savings, from the integration of the companies, will represent between one and 1.25 percent of the overall sales of the construction business. The non-recurrent restructuring costs caused by the merger have been calculated at between 4,000 and 5,000 million pesetas. Given that Agromán, as of 31st December last, had accumulated a negative taxable base income of 18,282 million pesetas, the tax savings that are expected from the business merger could total 6,700 million pesetas. "A positive operation for the Agrománs shareholders" In addition to positively assessing the effects of the operation for Agromán´s shareholders, Bergareche called attention to the fact that Grupo Ferrovial has officially informed the National Stock Exchange Commission that, in the coming months, it will offer Agromán´s minority shareholders the exchange of their current shares for others of Grupo Ferrovial that has been listed on the Stock Market since the beginning of this month. "This avoids the possible loss of liquidity of the old shares and facilitates access to an attractive security with great growth potential", he affirmed. The Chairman of Ferrovial-Agromán, S.A. emphasised the foreseeable increase in profitability for the shareholders who choose to take advantage of the exchange, which, in his opinion, would mean continuing with the securitys rise. Regarding this subject, he underscored the fact that, in 1998, Agromán shares underwent a revaluation of 145 percent, as opposed to 37 percent obtained by the General Index of the Madrid Stock Market, and 72 percent achieved by the Construction Sector Index. "The shareholders who participated in our last capital increase, done in November 1995, and who paid 190 pesetas per share, have seen the value of their investment increase eight fold ", he concluded. For Bergareche, the creation of Ferrovial-Agromán, S.A. allows them to face the future "with the confidence and optimism provided by the fact that Agromán and, in the immediate future, all of its shareholders, will be directly incorporated into the business project of Grupo Ferrovial; an ambitious project characterised by excellence in management, and built on three basic objectives: leadership, profitability, and growth in the sectors with the greatest potential for the coming century; in brief, a project committed, above all, to creating value for its shareholders". To carry out the split and to compensate the assets and debts split from Ferrovial, Agromán will make a capital increase, for a total of 16,125 million pesetas by issuing 161,254,330 new shares, each one with a face value of 100 pesetas. In addition, they will include an issue premium of 5,508 million pesetas. The new shares will be assigned to Grupo Ferrovial, which will then hold 93.55 percent of the new Ferrovial-Agromán, S.A. "Objectives achieved" Santiago Bergareche also considered that the creation of Ferrovial-Agromán, S.A. "culminates a process begun at the beginning of 1995, when Grupo Ferrovial acquired the majority share of Agrománs share capital and put in motion a plan of measures which, in four years, have brought our Company back to the position that corresponds to it as one of the leading construction companies in Spain: competitive, profitable, and solid from the point of view of net assets and finances". The Chairman evaluated Agrománs evolution over the last year very positively and emphasised especially "the 3,668 million pesetas of consolidated net profits, which triple the profits of the previous year and which place us in line with competitors in terms of profitability over the business figure of construction activity". Likewise, Bergareche underscored the investment made in Concesiones de Infrastructuras de Transporte, S.A. and Cintra, a company formed with Grupo Ferrovial in February 1998, and in which Agromán acquired an initial 40 percent stake, for an approximate amount of almost 25,000 million pesetas. He added that Cintra "in 1998 was awarded contracts that implied a total investment of more than 150,000 million pesetas and, already in the first months of 1999, has been awarded the most important concession of its type on a world-wide level: the construction and operation of the second beltway of the Canadian city of Toronto, a project that implies an investment of around 400,000 million pesetas, and which clearly demonstrates the international recognition of Cintras experience and management capacity in large projects. Good prospects for the sector Regarding the sectors prospects, Santiago Bergareche considered that "positive evolution in 1999, and even in the prospects of the coming years" could be expected. He based his opinion on the fact that the main factors that motivated the positive development in construction, in 1999, still persist. Among these, he cited "the growth rate of the Gross Domestic Product expected for 1999, the increase in the demand for homes because of the general savings conditions and low interest rates in our country, and the improvement of the budgetary situation of the public administrations". He also referred to "the private infrastructure financing plans, the recovery of business profits, and the increase in their investment, the lack of availability of quality spaces for tertiary uses in some cities, and the capacity of the large Spanish business groups to take on the financing of infrastructure projects".


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