In Spain, a country where 85% of all businesses are family-run, it is not only the people one knows but pedigree can help businesspeople throw their weight around. Optimal bloodlines meant ease in getting loans, and therefore, ending up in a pile of debt. That situation might have been precarious before for many Spanish family dynasties that ran businesses, but with the financial crisis the past few years in Spain, business owners have been hit especially hard, since they can no longer pay off their debt and find it more difficult than ever to obtain additional leverage.
Esther Koplowitz took substantial debt to buy her sister Alicia’s stake in the family company, Fomento de Construcciones & Contras SA (FCC), of which she now owns 50%. To buy the stick, she had to take on a debt of 1 billion euros or $1.3 billion.
Nicolas Veron of Breugel, a Brussels think tank, told Bloomberg, “There was a lot of leverage taken in Spain in the good years, and now it’s the day of reckoning. Typically, families don’t want to relinquish their equity control, and therefore, finance too much of their growth with debt.”
Currently, Koplowitz is negotiating her debt with Banco Bilbao Vizcaya Argentaria and Bankia SA. Koplowitz FCC has major investors, including George Soros and Bill Gates