Abengoa Expects at Least 75% of Creditors to Approve Plan
August 16 2016 - 3:10PM
Dow Jones News
MADRID—Renewable-energy and engineering company Abengoa SA said
Tuesday it expects at least 75% of creditors to approve its
restructuring plan by Sept. 30, a key hurdle for the company as it
aims to stave off what would be Spain's largest-ever corporate
bankruptcy.
Abengoa said in a regulatory filing that it "expects to
implement the final restructuring agreement" by Sept. 30.
Still, the Seville, Spain-based company cautioned that it
doesn't have definitive figures yet on what percentage of creditors
will accept the deal. Abengoa said it continues "working towards
gaining sufficient creditor support." Spanish bankruptcy law
requires three-quarters of creditors to ratify a restructuring
plan.
Executives said that once the restructuring plan is put in
place, they expect Abengoa to generate positive cash flow as of the
end of 2017. Asset sales will also help to streamline the company,
they added.
The details that Abengoa provided on Tuesday follow the
company's announcement last week that a group of investors
including Centerbridge Partners LP, Elliott Management Corp. and
Oaktree Capital Management LP had agreed to inject â,¬1.17 billion
($1.31 billion) into the debt-laden company. In exchange, the
investors will receive up to a 50% stake in Abengoa's equity.
Abengoa also said it would also receive €307 million in
financial guarantees
The renewable-energy company has been negotiating with creditors
since November to avoid becoming Spain's largest bankruptcy.
Abengoa has been among the top builders of power lines transporting
energy across Latin America and a top engineering and construction
business, manufacturing massive renewable-energy power plants
around the world.
But the company's expansion during Spain's boom years was fueled
by too much debt and misguided exuberance about future
profitability.The company has amassed around €9 billion in debt. On
Tuesday, Abengoa had a market value of €246 million.
Last week, Abengoa offered existing creditors two options to
avert the company's insolvency. One option: Creditors accept a 97%
loss on their financial debt, and the remaining 3% of outstanding
debt would receive no annual interest payments. Alternatively,
Abengoa said existing creditors could swap 70% of their debt
holdings into equity and receive a 40% stake in the restructured
company in return.
Investors and creditor banks, such as Spanish lenders Banco
Santander SA and Banco Popular Españ ol SA, are set to own between
90% and 95% of Abengoa after the restructuring, depending on
whether Abengoa meets certain targets.
"While we believe the deal has been structured to encourage
creditors to participate in the debt-for-equity swap, the relative
economics and attractiveness depend heavily on each creditor's
assessment of the enterprise value of Abengoa," analysts with
Moody's Investors Service said in an Aug. 12 report.
For years, Abengoa built power transmission lines, biofuel
plants and desalination infrastructure for clients. During Spain's
boom years, though, the company began to construct such projects
for itself, fueled by cheaper bank loans and a desire to expand.
The company took on piles of debt in anticipation of a growth rate
that never materialized.
In Madrid trading Tuesday, Abengoa's shares rose 4.6% to 66 euro
cents.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
August 16, 2016 14:55 ET (18:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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