Six Spanish banks have taken control of troubled real estate company Metrovacesa SA (MVC.MC), swapping debt for company shares held by its indebted top holder, the company said Friday.

Spain's Sanahuja family, which owned close to 85% of the country's top property company by assets, agreed in December to swap a 54% stake for EUR2.09 billion in debt. Banks had until Friday to execute the agreement.

The fall of Metrovacesa into the banks' hands marks the end of the aggressive, leveraged expansion of Spanish developers in a booming property market that collapsed soon after the global financial crisis hit. In its wake, banks now are having to exchange billions of euros of debt held by the owners of property companies for real-estate assets that are difficult, if not impossible, to sell under current market conditions.

Rival Inmobiliaria Colonial SA (COL.MC) recently fell into the hands of creditors after its main shareholders failed to service debt backed by company shares.

Creditors taking control of Metrovacesa include Banco Bilbao Vizcaya Argentaria SA (BBV), Banco Espanol de Credito SA (BTO.MC), Banco Sabadell SA (SAB.MC), Banco Santander (STD), Banco Popular Espanol SA (POP.MC) and Caja Madrid.

The demise of Metrovacesa took place after a bitter board dispute for control of what once was one of the largest real-estate companies in the euro zone. The battle for control of the company culminated in 2007 in a complex asset separation between its main owners.

The Sanahujas then assumed control of the Metrovacesa brand and most of its assets in Spain, while the group of investors led by former chairman Joaquin Rivero got the French assets held by its Gecina SA (1004086.FR) unit.

Metrovacesa had some EUR7 billion in debt at Sept. 30, before selling back to HSBC Holdings PLC (HSBA) its London headquarters in December for about GBP838 million.

Four of Metrovacesa's creditor banks also agreed to buy another 10.8% stake, or some 7.5 million shares, bringing the banks' combined stake to 65.5%. The Sanahujas have an option to buy back the 10.8% stake after four years for EUR57 per share, Metrovacesa said.

Under terms of the agreement, the Sanahuja family will see their ownership reduced to about 30%. They are also giving up voting rights and will lose all but one seat on the board of directors.

Roman Sanahuja Pons, who was up to now the chairman of Metrovacesa, will remain as director. Vitalino Nafria, a former senior BBVA executive, was appointed chairman.

 
   Company Web site: www.metrovacesa.es 
 
   -By Santiago Perez; Dow Jones Newswires; (34) 395 8119; santiago.perez@dowjones.com
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