Spanish builder and services company FCC (FCC.MC) said on Sunday its board had approved a well-flagged capital increase of 1 billion euros ($1.3 billion) which it will use to pay down debt.

The loss-making company did not give further details about the rights issue which will heavily dilute its stock and is still pending shareholder approval. FCC convened a shareholders' meeting for Nov. 20 to vote on the matter.

FCC, like other Spanish builders, amassed large debt during Spain's construction boom only to see profits plunge when the housing bubble burst six years ago. It will use proceeds from the capital hike to pay down part of its debt with punitive interest rates.

"By substantially reducing the debt load, (the rights issue) will also have a significant impact on results," the company said in a statement, without elaborating further.

Esther Koplowitz, major shareholder and daughter of the company's founder, finally signed a separate deal to restructure around 1 billion euros of debt, a source with knowledge of the matter said, and backed the capital hike which will slash her holding.

"The board thanks major shareholder Esther Koplowitz

for the efforts she has made to make the financial restructuring of FCC possible," the company said in a statement on Sunday.

Koplowitz's failure to sign off on a debt restructuring at her investment vehicle which holds more than 50 percent of FCC had spooked investors last week, pushing FCC shares lower and raising fears the rights issue would not be carried out before the end of the year.

The rights issue, heavily dilutive for a company with a stock market value of around 1.7 billion euros, will substantially reduce Koplowitz's stake holding in the company she and her sister Alicia inherited from their father. Esther bought out her sister in 1997.

FCC said on Sunday that paying off part of its debt would allow the company to achieve targets set out in a 2013 strategic plan ahead of the three-year span it had given itself.

The targets included reducing debt levels to 4 times earnings before interest, tax, depreciation and amortization (EBITDA), achieving EBITDA of 1.1 billion euros and generating cash flow of 850 million euros.