ECOVIS Legal Spain assists Spanish automotive components producer with expansion of plant

Background

Our client is a major multinational company in the automotive sector, with various plants in Spain which produce automotive components. The company needed to expand one of its plants in Northern Spain to increase its production capacity.

Issue

The client needed to expand its premises as the current production capacity was not large enough to meet the requirements of the final clients. Our client consulted us on the advisability of incorporating a new specific company and on real estate matters. The company needed the expansion to be near its current plant to reduce costs and wanted to determine all the legal risks entailed. Some of the plots where it would be feasible to build the new plant were the subject of an insolvency procedure, others had some zoning regulation issues, and others had several owners and were difficult to manage. The client also needed to acquire heavy machinery, and since the financing of the operation involved different possibilities the client asked ECOVIS LEGAL SPAIN for our advice on the matter.

Solution

After excluding the advisability of incorporating a new company due to the problems which would arise in co-ordinating workforce and cross-production issues, we reviewed the various options open to the client, studied the legal situation of each of the plots of land offered to the client and made a preliminary investigation of the situation of each piece of real estate in the property register. We then made a list of the pros and cons of each plot of land and, together with the client, we ranked the risks the client might encounter. We had to bear in mind the urgency with which the client needed to be able to construct the extension of the plant and therefore the requirement for more or fewer legal formalities in the acquisition of the plot of land. ECOVIS LEGAL SPAIN also presented different options for the acquisition of the plot of land, either through direct acquisition, a rental agreement with a purchase option or a financial leasing agreement. Together with the client we chose the best available option, taking into consideration all the preceding factors. It was very important to act in a very co-ordinated manner with the client so as to meet its real needs.

Currently

ECOVIS LEGAL SPAIN is now executing the approved strategy, negotiating the different contracts with the owner of the chosen plot of land, the building company and the provider of machinery, in order to guarantee that all three operations are co-ordinated correctly and to allow the client to expand its facilities and be able to start the operation of the plant in time to meet the requirements of its final clients.

Author

Christian Koch, lawyer, ECOVIS Legal Spain v. Carstenn-Lichterfelde Abogados, Madrid, Spain

christian.koch@ecovis.es