The Spanish and Basque governments agree to SEPI's participation in the purchase of Talgo.

MadridThe back-and-forth over control of Talgo continues. Finally, the Spanish government and the Basque government agreed that SEPI, the investment arm of the Spanish government, will participate in Sidenor's takeover of Talgo, as the regional government announced in a press release Tuesday night, following the Bilateral Commission between the two governments held in Madrid. "This is long-awaited news: both governments have channeled SEPI's participation to make the [Sidenor] operation viable and thus maintain Talgo's activity and occupation in the Basque Country," the Basque government reported. Beyond that, however, Basque Basque Regional President Imanol Pradales declined to go into detail about the basis of this participation, that is, whether it involves the purchase of a portion of Talgo's shares by SEPI or the granting of a long-term convertible loan, as reported by the newspaper. The CountryPradales explained that the agreement will be developed "in the coming weeks." "I want discretion," he said. Be that as it may, the move provides a breath of fresh air that should allow the Basque company Sidenor to take definitive control of Talgo: the entry of SEPI would be a way to strengthen the company's accounts and allow banks to refinance its debt.

Last February, and after several failed takeover bids—the Spanish government vetoed the purchase of Talgo by the Hungarian company Magyar Vagon— The Basque metal company Sidenor announced the purchase of 29.7% of Talgo's share capital., until then held by the British fund Trilantic. The purchase offer entailed a €184 million outlay and had the financial support of the Basque government, as well as the BBK and Vital foundations, shareholders of Kutxabank. Sidenor's bid to acquire almost 30% of Talgo. Specifically, it involves refinancing Talgo's €400 million debt to make Sidenor's entry possible.

The operation is viable. In fact, it should be noted that the Sidenor option was also sponsored by Pedro Sánchez's government, which considers Talgo a "strategic" company.

However, Talgo faces a series of challenges that are making it less than ideal. For starters, it has signed orders that, for now, it cannot fulfill: the Avril trains for Renfe are a prime example. In fact, the train manufacturer is engaged in a dispute with the Spanish operator, which is demanding €116 million for the delay in the delivery of these trains, in addition to additional compensation. Furthermore, the workforce has emphasized that Talgo needs an investor to help it secure new medium- and long-term contracts so it can compete with other major European manufacturers, such as CAF.