GAM makes €128m loss as debt negotiations continue

GAM Alquiler, the financially troubled Spanish rental company, made a €128 million loss in 2011, more than double that of the previous year. The loss included a €58 million goodwill impairment charge in Spain as well as €25.2 million one-off costs relating to tax and asset impairment.

The company's revenues fell by 21% to €200.9 million, with its business in Spain down 22.5% to €150.7 million, although its revenues outside Spain rose by 16.4% to €50.3 million. EBITDA profits were €24 million, down 60% on the previous year. The company's revenues in 2008 were €378 million.

GAM's external businesses are located mainly in Latin America and Eastern Europe. GAM's financial results break these external sales into three geographical areas: the European Union, OECD countries, and ‘other'.

GAM's revenues in the EU countries - Poland, Romania and Bulgaria - were down 11.7% to €23.9 million and revenues in OECD countries (which could include Mexico, Chile and also Poland), were up 9.7% to €13.5 million. Sales in ‘other' territories - mostly in Latin America and Morocco - rose by more than double to €15.7 million.

GAM is in the middle of a lengthy restructuring negotiation with its lenders. At the end of 2011 the company had around €448.5 million of debt, and holders of 84% of this debt have agreed to extend the deadline for negotiations until 31 March. GAM's managers said there was a realistic expectation that these negotiations would prove successful.

The company is continuing with its internationalisation strategy and said it hoped the debt restructuring being discussed would give it time to maintain this strategy.

The €58 million write-off for goodwill in Spain relates to GAM's lower expectations of future revenue domestically, reflecting the continued problems with Spain's construction sector.

The company further reduced its staff during 2011, with 1546 employed at the end of 2011, a reduction of 21% over the previous year.