GECINA - REFERENCE DOCUMENT 2017

06

RISKS Risks

On September 11, 2014, the Spanish bank Abanca ■ requested the payment by Gecina of €63 million pursuant to the guarantee letters of endorsements that were allegedly signed in 2008 and 2009, by Mr. Joaquin Rivero, former Gecina officer. Gecina, which had no knowledge of these letters of endorsement, considered, after talking to its legal advisers, that they represent a fraudulent arrangement since they are in breach of its corporate interest and of applicable rules and procedures. For these reasons, Gecina informed Abanca that it contested the fact that it owed the sum being claimed and that as a result, it would not respond to its claim. On October 24, 2014, the company filed a criminal complaint against Mr. Rivero and any other person involved, for misuse of authority under these letters of endorsement. Since Mr. Joaquin Rivero was not the only person targeted by this complaint, this procedure is still ongoing. Abanca summoned Gecina before the Court of First Instance of Madrid. (See section 6.1.5.2). On July 16, 2012, the company was informed by Banco ■ de Valencia of the existence of four promissory notes issued in 2007 and 2009 in the total amount of €140 million. Three of them were issued in the name of “Gecina SA Succursal en España” and one in the name of Gecina SA, for a Spanish company called Arlette Dome SL. The latter allegedly transferred the above-mentioned promissory notes to Banco de Valencia to guarantee loans granted by the bank. After verification, the company realized that it had no information about these alleged promissory notes or about any business relationship with Arlette Dome SL which could have justified their issue. After also observing the existence of evidence pointing to the fraudulent nature of their issuance if the issue were to be confirmed, the company has filed a criminal complaint in this respect with the competent Spanish authorities. Following a series of decisions and appeals, Gecina was recognized as party to the proceedings on April 19, 2016 before the National Court, where the company continues to assert its rights. No provision was recognized for this purpose. disputes The Spanish bank Abanca, after seeking the payment by ■ Gecina of €63 million (€48.7 million in principal) pursuant to the guarantee letters of engagement allegedly signed in 2008 and 2009 by Mr. Joaquin Rivero, former Gecina officer (see section 6.1.5.1), issued a summons to Gecina to appear in the lower court of Madrid in order to obtain payment of the sums claimed. Gecina is challenging Abanca’s claims, asserting its rights and defending its interests in these proceedings. On June 10, 2016, the Court of First Instance of Madrid declared that it had no jurisdiction to try the dispute. On Pending civil and commercial court 6.1.5.2

July 14, 2016, Abanca appealed this decision. On July 4, 2017, the Appeal Court of Madrid declared that the Spanish Courts do have jurisdiction to hear Abanca’s claim. The proceedings on the merits are ongoing before the court of First Instance of Madrid. Gecina also filed a criminal complaint in France against Mr. Rivero and any other party involved, for misuse of authority for letters of commitment cited by Abanca (see section 6.1.5.1). No provision was recognized for this purpose. Bami Newco was the subject of insolvency proceedings ■ commenced in June 2013. Gecina and SIF Espagne reported their receivables in the context of these bankruptcy proceedings. The liquidation plan sent to the parties in November 2015 is still in execution by the court-ordered liquidator. This plan shows a liability significantly higher than the remaining assets of Bami Newco, thereby confirming that it is unlikely for Gecina and SIF Espagne to recover their receivables, considered as subordinated debt. On January 22, 2016, Gecina and SIF Espagne filed pleadings seeking a classification of fraudulent bankruptcy and liability of the de facto and de jure Directors of Bami Newco and they continue to assert their rights and defend their interests in this proceeding. The Spanish company Bamolo, to which Gecina granted in 2007 a €59 million loan, which matured in October 2010, filed for bankruptcy in 2011. Gecina has reported this loan refund receivable as a loss, under the Spanish proceedings. Having gained knowledge of a loan at the same time as the Gecina loan, granted by Bamolo, for an equivalent amount to a company known as Eusko Levantear Eraikuntzak II (ELE), also in receivership, Gecina is asserting its rights and defending its interests in these two bankruptcy proceedings. Following the liquidation phase of Bamolo, on March 10, 2015, Gecina filed, before the Spanish courts, a liability action against the de jure and de facto Directors of Bamolo, including Mr. Joaquin Rivero, for fraudulent bankruptcy. The proceedings are ongoing. A joint bond of €5 million involving SIF Espagne was ■ granted to FCC Construcción for the development by Bami Newco of a corporate office in Madrid on behalf of FCC Construcción. The latter went to a Spanish court to demand the payment of this bond. On September 12, 2014, the Madrid Appeals Court ordered Bami Newco and its guarantors (SIF Espagne and Inmopark 92 Alicante) to pay jointly to FCC Construcción the sum of €5 million in principal, in addition to late penalties and court costs. In November 2014, FCC Construcción requested the execution of the aforesaid order against SIF Espagne, which made the corresponding payment. Bami Newco and SIF Espagne appealed to the Court of Cassation, but their appeal was dismissed in a judgment on January 11, 2017, thereby firmly and definitively closing the appeal.

186 GECINA - REFERENCE DOCUMENT 2017

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