FORM
6-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16
of
the Securities Exchange Act of 1934
For
the month of August, 2015
Commission File Number 1-11080
THE
ICA CORPORATION
(Translation of registrant's name into English)
Blvd.
Manuel Avila Camacho 36
Col. Lomas de Chapultepec
Del. Miguel Hidalgo
11000 Mexico City
Mexico
(Address of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form
20-F.....x.... Form 40-F.........
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Indicate
by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes
..... No...x...
If
"Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
ICA reports
the refiling of its CNBV letter on derivative instruments for the second quarter of 2015
August 26, 2015, Mexico
City — Empresas ICA, S.A.B. de C.V. (BMV and NYSE: ICA), the largest infrastructure and construction company in Mexico,
informs that it has refiled its letter regarding derivative instruments for the second quarter of 2015, in accordance with a requirement
of the National Banking and Securities Commission (CNBV). This letter includes details on the positions that each instrument hedges,
as well as descriptions of the methods used for the determination of expected losses.
There is no change in ICA’s
reported second quarter earnings.
This press release contains
projections or other forward-looking statements related to ICA that reflect ICA’s current expectations or beliefs concerning
future events. Such forward-looking statements are subject to various risks and uncertainties and may differ materially from actual
results or events due to important factors such as changes in general economic, business or political or other conditions in Mexico,
Latin America or elsewhere, changes in capital markets in general that may affect policies or attitudes towards lending to Mexico
or Mexican companies, changes in tax and other laws affecting ICA’s businesses, increased costs, unanticipated increases
in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms and other factors
set forth in ICA’s most recent filing on Form 20-F and in any filing or submission ICA has made with the SEC subsequent to
its most recent filing on Form 20-F. All forward-looking statements are based on information available to ICA on the date hereof,
and ICA assumes no obligation to update such statements.
Empresas ICA, S.A.B.
de C.V. is Mexico's largest infrastructure company. ICA carries out large-scale civil and industrial construction projects and
operates a portfolio of long-term assets, including airports, toll roads, water systems, and real estate. Founded in 1947, lCA
is listed on the Mexican and New York Stock exchanges. For more information, visit ir.ica.com.mx
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For more information, please contact:
Elena Garcia
elena.garcia@ica.mx
Gabriela Orozco
gabriela.orozco@ica.mx
relacion.inversionistas@ica.mx
+(5255) 5272 9991 x 3608
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Gabriel de la Concha
gabriel.delaconcha@ica.mx
Chief Financial Officer
In the US:
Daniel Wilson, Zemi Communications
+(1212) 689 9560
dbmwilson@zemi.com |
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| (Translation) File |
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151.112.32 |
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NATIONAL BANKING AND SECURITIES COMMISSION
LIC. RAFAEL COLADO IBARRECHE
Chief Supervisor of Issuers
LIC. ANDREA FABIOLA TINOCO H.
Chief Supervisor for Compliance with Stock Market
Supervision
Mexico City, August 24th, 2015
RE: 151-2/76211/2009
RODRIGO A. QUINTANA KAWAGE, acting in
my capacity as legal representative of Empresas ICA S.A.B. de C.V. (ICA or “the Issuer”) with an address for notifications
located at Blvd. Manuel Ávila Camacho No. 36, 15th floor, Col. Lomas de Chapultepec, 11000, Mexico City, Federal
District, and being duly registered before the National Banking and Securities Commission (CNBV) respectfully appear and state
the following:
On January 20, 2009 I was notified of
Order No. 151-2/76211/2009, File 151.112.32 which requested that ICA disclose qualitative and quantitative information regarding
ICA’s exposure to financial derivative instruments, whether to increase profitability or to hedge risks, in order to provide
investors information that would allow them to understand ICA’s operations with financial derivative instruments.
Based on the foregoing requirement, we state
the following:
I. Qualitative and Quantitative Information
i) ICA only contracts hedging instruments
in order to reduce the uncertainty on the return on its projects. It is the policy to contract financial instruments at the level
of the project in order to mitigate the risks resulting from interest rates and exchange rate fluctuations. From an accounting
perspective, the derivative instruments may be classified as hedging instruments or trading instruments, although in all cases
the objective is to mitigate risks to which ICA is exposed in its projects. Interest rate hedges are established based on a notional
value with the objective to cap maximum financial costs.
Exchange rate hedges are contracted to
ensure that the project will have sufficient resources for labor costs and inputs that are incurred in currencies different from
those provided by the financing of the project, which is in the same currency as the source of repayment. ICA contracts all derivatives
in the subsidiaries where the projects are located.
The contracting of financial derivatives
is linked to the financing of projects, as a result of which it is often the case that the counterparty is the same institution
that is providing the financing or one of its. These derivatives are non exchange traded (OTC) derivatives.
Our internal control policies state that
the contracting of credits (tied to the financing of projects) and the risks inherent in the projects require collaborative analysis
by representatives from the Finance, Law, Administration, and Operations areas, prior to any approval. This analysis also includes
the use of derivatives to hedge the risks of the financing. Once this analysis has been concluded and documented, the responsibility
for contracting derivatives belongs to the Finance area, in accordance with internal control policy.
The hedging instruments are contracted
to fix the variable interest rates of the loans. The changes between the fair value of these instruments and the primary positions
are compensated at an inverse correlation within a range between 80% and 125%. These instruments are classified as highly effective.
The decision to contract derivative financial
instruments is linked to the amount and level of financing for the project. The levels of authorization do not expressly contemplate
requiring the authorization of the Corporate Practices or Audit Committees. With respect to approval authorization levels, ICA
has documented policies, of which the most important are the following:
| § | The Chief Executive Officer, the Vice President for Finance and Administration,
and/or the responsible Finance officer have limits on their authorities to act, whether in terms of amounts or for unusual or non-recurring
operations. |
| § | The Chief Executive Officer has the authority to establish limits
on the approval authorities of other Officers in terms of amounts or kind of operation. |
| § | In the event that a higher level of authorization is required, the
Board of Directors will make the approval, after considering the opinion of the Chief Executive Officer and/or the applicable Committees. |
The derivatives that are contracted do
not have margin calls, in accordance with what is negotiated with each counterparty. For those projects that require collateral,
the policy is that any required deposits to be made or standby letters of credit be provided at the time of contracting the derivative.
This collateral will only be payable in the event of non-compliance.
In accordance with the standards of the
International Swaps and Derivatives Association (ISDA), it is agreed that counterparties may act as valuation or calculation agents,
in order to determine fair value and required payments.
While there is no formal risk committee,
as previously stated various areas participate in the evaluation, administration, and monitoring of project risks (both financial
and operational). As regards risk administration, there are documented processes that require the periodic review of risks.
ii) ICA uses the valuations of counterparties
(valuation agents) and a price provider authorized by the CNBV in order to calculate the fair value of derivative positions for
accounting purposes. The valuations are made using formal, documented methodologies. The calculated values are based on fair value
measurements techniques recognized in the financial sector and supported by sufficient, reliable and verifiable information. The
data used for the calculations comes from reliable and verifiable sources that reflect market prices.
Fair value is recognized in the balance
sheet as an asset or liability, in accordance with the rights or obligations derived from the contracts executed and in accordance
with accounting norms. Changes in fair value are recorded in the balance sheet. In addition to the valuations that are received,
the pricing provider carries out tests of effectiveness for the derivatives that qualify as hedging instruments from an accounting
perspective.
When the transactions comply with all
hedging requirements, the Company designates the derivatives as hedging financial instrument at the beginning of the relationship.
For fair value hedges, the fluctuation in the fair value of both the derivatives and the open risk position is recognized in results
of the period in which it takes place. For cash flow hedges, the effective portions is temporarily recognized in comprehensive
income within stockholder’s equity and is subsequently reclassifies to results at the same time that they are affected by
the item being hedge; the ineffective portion is recognized immediately in results of the period.
As previously mentioned, occasionally
derivatives contracted as hedges do not qualify for accounting treatment as hedging instruments, and are classified as trading
derivatives for accounting purposes. In these cases, the fluctuation in fair value on these derivatives is recognized in the results
of the period.
iii) ICA has a policy of contracting derivatives
instruments at the project level and not contracting instruments that have margin call or additional credit requirements beyond
those authorized by the responsible committees at the time of approval. At June 30, 2015 there has been no default on the contracts.
iv) Based on the interest rate and exchange
rate projections recently issued by Banco de México, and assuming these rates are maintained, the Issuer does not expect
to suffer any material adverse impact from its derivative positions on its results of operations for the third quarter of 2015
as a result of additional changes in the peso or changes in interest rates since June 30, 2015.
In accordance with your request for this
section, we set forth below the derivatives that matured or had an early termination during the quarter.
The following were the effects of derivative
transactions as of June 30, 2015:
v) Table 1 presents the information requested
regarding all material instruments that the Issuer currently has outstanding through project companies, including subsidiaries
and affiliates.
II. SENSITIVITY ANALYSIS
The derivatives instruments identified
in the table above as hedging derivatives were excluded from the sensitivity analysis because they do not show any ineffectiveness.
Sensitivity analysis was developed
considering three scenarios: a) 25 bp increase/reduction in interest rates; b) 50 bp increase/reduction in interest rates; and
c) 100 bp increase/reduction in interest rates.
When the underlying are shares,
the sensitivity analysis was developed considering three scenarios: a) 5% increase/reduction in the stock price; b) 10% increase/reduction
in the stock price; and c) 15% increase/reduction in the stock price.
In conclusion, on aggregating the potential
losses under the different scenarios described above for the position analyzed, the following results obtain:
Applied method for determining expected loss
To determine the expected losses of the sensitivity
analysis we used the following methods:
| § | Black-Scholes model: for the Options (Option
30 MM and Equity Zero Cost Collar) with a volatility surface |
| § | Fair Value model: for the Swap (Swap Aeroinvest)
and the Forward strategy (ICA Guatemala) |
Compared to balance sheet concepts and
revenues, one can appreciate that under no scenario, is the effect more than 5% of assets, liabilities, or shareholders’
equity as of June 30, 2015, as shown below. The threshold of 3% of revenues is not exceeded under any scenario as well.
In virtue of the foregoing, the undersigned
respectfully submits to the National Banking and Securities Commission:
FIRST. I have responded on time and in
the appropriate manner, and with the authorities granted to me.
SECOND. I have delivered the information
required in your Order No. 151-2/76211/2009.
Mexico City, August 24th, 2015
________________________________________
Empresas ICA, S.A.B. de C.V.
By: Rodrigo A. Quintana Kawage
Position: Legal Representative
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| Date: August 27, 2015 |
Empresas ICA, S.A.B. de C.V.
/s/ Gabriel de la Concha Guerrero
Name: Gabriel de la Concha Guerrero
Title: Chief Financial Officer
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