Spain's Martinsa refinances 4 bln euros of debt

MADRID, May 7 (Reuters) - Spanish property firm Martinsa Fadesa (MFAD.MC: Quote, Profile, Research) has refinanced 4 billion euros ($6.2 billion) of its debt mountain still outstanding and has agreed to put up a further 350 million euros to strengthen its balance sheet, it said on Wednesday.

The company was making public details of a deal in principle it struck with creditors a month ago after lengthy negotiations over restructuring its 5.1 billion euro debt pile. It did not mention how it would refinance the remaining 1.1 billion euros.

In common with other property companies, Martinsa Fadesa has been hurt by the sharp deterioration of the Spanish property market, which has seen a huge fall in home sales.

Of the debt refinanced, 2.579 billion euros comes from debt it built up buying rival Fadesa last year and 1.422 billion of it relates to short-term operating debt.

The loan expires in 2011 but can be extended for a further two years, the company said. In that time Martinsa has to pay interest, the first due in December, and also use surplus cash-flow and funds from the sale of certain assets to make further repayments.

The company said that under the agreement it had to strengthen its balance sheet by 350 million euros, but that loans taken out to pay for that would be completely subordinate to the larger loan.

It also said it had signed a loan for 50 million euros which it would repay, with interest, after the expiry of the principal loan, which involves 45 Spanish and international banks. (Reporting by Carlos Ruano; Translating by Ben Harding, editing by Will Waterman)