Abengoa Reaches Deal With Creditors to Avoid Bankruptcy
August 11 2016 - 7:10AM
Dow Jones News
MADRID—Spanish renewable energy and engineering firm Abengoa SA
said it had reached a restructuring deal with its creditors to
avoid Spain's largest-ever bankruptcy, sending shares up nearly 4%
in mid-morning trading in Madrid.
A group of investors including Centerbridge Partners LP, Elliott
Management Corp. and Oaktree Capital Management LP have agreed to
inject €1.17 billion ($1.31 billion) into the debt-laden company,
Abengoa said in a regulatory filing on Thursday. Abengoa will also
receive €307 million in financial guarantees, the filing said.
In exchange, 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, depending on whether it
meets certain targets.
The company didn't clarify whether 75% of creditors had agreed
to the restructuring deal, as required by Spanish bankruptcy law.
Abengoa said it plans to hold a telephone conference with investors
and analysts on Aug. 16 at noon New York time to provide further
details.
The Seville-based company has been negotiating with creditors
since November to avoid becoming the country's largest bankruptcy,
after years of debt-fueled expansion during Spain's boom years
eventually caught up with the company.
The company 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 in places from Kansas to the U.K.
But last year, investors grew wary about how much cash Abengoa
had to manage its debt pile. While the company's debt load was
nothing new for investors and analysts who had been monitoring the
company for years, moves last summer led some investors to conclude
that Abengoa had less cash on hand than they thought.
Investors and analysts trace Abengoa's current financial
difficulties to a shift in strategy during Spain's property boom,
which started to gain momentum around 2004. The country's banks
eased borrowing requirements for companies, which helped trigger an
infectious corporate optimism, spurring some Spanish companies to
step up expansion abroad.
From its inception, Abengoa built power transmission lines,
biofuel plants and desalination infrastructure for clients. During
Spain's boom years, though, it 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.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
August 11, 2016 06:55 ET (10:55 GMT)
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