Investment Opportunity

We last mentioned the Rumasa group of companies a couple of months ago to draw attention to the evident fact that the Spanish economy, through the all too intimate relationship between financial institutions and the real estate and construction industries, had been allowed to devolve into a self-serving cartel - with predictably disastrous consequences. The Ruíz Mateo empire, now named Nueva Rumasa, once again finds itself in the news.

Through one of its subsidiaries, the family-owned, unlisted company is offering to the public unsecured bonds of one year duration yielding 8%, with the money being targetted to the purchase of distressed assets. Among the disadvantages to this plan, as far as the investor is concerned, are:

1). The offer does not include any right to look over the books of the nominal debtor, Carcesa;

2). The minimum investment of 50,000 euros places the entire operation beyond the control of the Spanish markets supervisor, the CNMV. This latter, however, did take some umbrage at Rumasa's original interpretation of this lack of a rule as being an official 'approval' of the operation - a claim which was removed from ensuing publicity.

Certainly appealing to a particular moneyed class of Spaniard to whom we regularly refer to as the hysterical wing of the Partido Popular (which spends much of its time lamenting the arrival of democracy to Spain), our primary doubt concerning this investment would centre on there being no written guarantees that neither the progenitors of this family, nor any of their twelve children, will use the money to finance a coup, later to install a theocracy under the direction of ayatollah Antonio María Ruoco Varela, in the Moncloa.

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