Abengoa strikes $2bn creditor deal to ward off bankruptcy

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Spain’s Abengoa has this week agreed a $2 billion debt-restructuring deal in order to avoid what would be the country’s largest-ever insolvency.

The clean power developer, which has been a leader in concentrating solar power (CSP) projects worldwide, has been racing against the clock to secure salvageable financing ahead of a March 28 deadline.

This loan package has served to stave off bankruptcy, but at a cost: the deal means that a consortium of creditors – comprised of leading banks HSBC, Banco Santander and Credit Agricole – now own a 55% stake in the firm, with the founding Benjumea family’s stake reduced to just 5%.

Final approval of the preliminary deal must still be given by the creditors, but analysts are confident that it will go ahead, with most welcoming the deal. "The plan is a step in the right direction," Felipe Villaroel, a money manager at TwentyFour Asset Management, told Bloomberg. "It looks like the probability of a liquidation has decreased, but still it’s not a done deal."

The terms of the deal stipulate that the loan will be secured against assets held by Abengoa, including shares in affiliate Abengoa Yield, which acts as owner and operator of the firm’s solar plants.

Abengoa first filed for creditor protection in November last year, revealing that the firm had racked up more than $10 billion in debt and had failed to raise further funds from shareholders to pay off a maturing bond. For 2015 the firm reported a €1.2 billion loss, falling from a €125.3 million profit at the end of 2014. Having sought rapid global expansion across a range of key markets – in both the CSP and solar PV industries – Abengoa ran into cash-flow difficulties last year.

In February it was revealed that the company was looking to offload its stake in the 100 MW Shams CSP plant in Abu Dhabi to raise some much-needed capital.

Having backed CSP development to the hilt, some industry experts have remarked that the sector’s high operating costs – particularly when compared to PV – may have served to worsen Abengoa’s finances. While energy production costs for solar PV have fallen globally to below $2 per watt, the average CSP plant delivers solar energy at around $6 per watt.