• Post-Bailout, Citigroup Buys the Road Not Taken to the Danger Zone

    Imagine, for a moment, that you're in charge of Citigroup. The government has just handed you a sack containing $20 billion and agreed to guarantee $306 billion in toxic assets that are stinking up your balance sheet. This deal comes with all kinds of fancy strings attached, like not having to make any changes to your executive management or board of directors. Nah, dude. We cool, bro.

    Then the world's partypoopers start clamoring for you to restructure, or get rid of some non-core businesses, or at least do something about the mountains of debt and bad assets that you've squirreled away under your duvet. Your stock plummets. Your CEO becomes a punch line and/or a punching bag. What do you do?

    If you answered "sink $10 billion into a debt-riddled Spanish toll road operator," congratulations! You win a debt-riddled Spanish toll road operator…

    Spanish construction company Sacyr Vallehermoso said Monday it has agreed to sell its highway-operating unit, Itinere, to alternative investment unit Citi Infrastructure Investors in a deal valued at nearly 7.9 billion euros ($10 billion).

    The sale involves 2.87 billion euros in cash and 5 billion euros in assumed debt. Citi will offer to buy all of Itinere's stock at 3.96 euros ($5.04) a share [an 18% premium], the Spanish construction company said… Sacyr Vallehermoso has been hard hit by the collapse of Spain's real estate bubble and is eager to ease its debt load.

    Using investment funds to help ease debt loads? Huh? Well, now, that's an interesting idea. I think I need a moment to process this.

    Let's crawl back under our duvets and meditate for a spell.

    Tags: Citigroup, Economy, Spain


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