Portugal Capital Ventures now owns 100% of the share capital of Parkalgar, the ill-fated company that built the Algarve’s racetrack and which limped from an agreement with its creditors last autumn to failure last week.
Amid public concern over the racetrack takeover that was announced last week, yet was short on details, it was confirmed today that the venture capital company, ultimately owned by the state (please see below), has complete control over the racetrack and over all the other assets formerly owned by Parkalgar.4
A source close to Portugal Capital Ventures' management outlined that the strategy for the company was to take over the share capital of Parkalgar at nil cost, but to assume the substantial debts that had built up, including money owed to the bailed-out bank BCP and the constructor of the track, Bemposta.
Other creditors include the smaller and not so small suppliers - some 288 of them - to the failed Parkalgar business who all were bounced into an agreement to waive 70% of the money owned and therefore accept repayment of just 30% of their debts to be paid only when Parkalgar started to sell off the unfinished race track apartments.
As part of the creditors’ deal last November, bankers BCP wrote off around €20 million of the €119 million that it was owed, a figures which will have increased in the past 11 months, and the management of Parkalgar agreed in return to put in place a cost reduction plan and an asset sale programme. These clearly have failed and the taxpayer now owns the business.
Through the state’s use of an adept venture capital company with the resources to finish off the building programme at the track, namely one hotel and the remaining apartment blocks, and to employ the best people to develop and run the business, the racetrack may yet have a chance of success.
Portugal Capital Ventures has swallowed Parkalgar, debts and all, and can now remove Parkalgar’s notoriously poor top management and allow the business some breathing space while a new chief executive and management team with relevant experience is assembled for the task ahead.
In the absence of a commercial buyer, the alternative was to watch the weeds growing through the tarmac and the move has generally been welcomed in Portugal's business community, even though early lack of communication from the new owners does not bode well.
There is still substantial debt but with a grown-up approach to completing the building programme at the track, managing and developing the business and putting in experienced and internationally renowned managers to run the business, the racetrack, often referred to as one of the Algarve’s white elephants, has its best chance yet of a successful future.
Portugal Capital Ventures' shareholders:
IAPMEI - Portuguese SME Support and Innovation Institute
AICEP Portugal Global - Trade and Investment Agency
Turismo de Portugal - Portuguese Tourism Authority
DGTF - Directorate General of Treasury and Finance of the Portuguese Ministry of Finance
Banco BPI - Portuguese Bank
Millennium BCP - Portuguese Bank
Banco Espírito Santo - Portuguese Bank
Banco Santander Totta - Portuguese Bank
Petróleos de Portugal - Portuguese Oil Company
Companhia de Seguros Açoreana - Portuguese Insurance Company
Citibank Portugal - Portuguese Bank
Banco Efisa - Portuguese Bank
Montepio Geral - Portuguese Bank
Banco BIC - Portuguese Bank.