After opening insolvency proceedings in November 2015 and then watching the value of its stock plummet over 70%, Abengoa has been handed a lifeline as creditors agree to give the company a further seven months to approve a deal to restructure its debt. The preliminary deal, struck earlier in the month, would see the company receive approximately US$2bn in return for a 55% stake in the company, which would be handed over to its creditors.
Spains largest renewable energy firm was given until March 28 2016 to agree a deal with at least 60% of its creditors after it entered insolvency proceedings in November 2015. The company took a 106 million loan from its creditors on December 24 to stay above water, finishing 2015 with a debt of 9.4bn (US$10.5bn), which it hopes to slash almost in half, bringing it down to 4.9bn with debt-for-equity swaps.
A preliminary deal was made earlier in March for the companys creditors to take 55% of its equity for handing over around 1.8bn. This deal, however, still required final approval. To fend off the initial 28 March deadline, 75.04% of Abengoas creditors agreed to give the company a seven-month grace period, during which repayments will not be demanded and the debt restructuring deal can be finalized.
"This key step in the restructuring process of Abengoa and will permit the company to complete the Financial Viability Plan that has already been accepted by lenders in order to stabilise business and protect its leadership in the energy and environmental sectors," the company said in a statement. Abengoa is working hard to meet the objectives set out in the re-sizing of the company.
Abengoa claims that Spains cuts to renewable energy subsidies have been largely to blame for its financial woes, saying that it lost out on 1.5bn as a result in the Spanish reform. Another pivotal factor in the companys misfortune was Gonvarri pulling out of a plan to invest $371 million in Abengoa at the backend of 2015. Risky investments into biofuels may also have contributed to its problems.
Looking to the future, Abengoa hopes that it will be able to slash its debts and get back to the core activities of the business, with intentions in place to sell off its biofuels assets as well as other holdings. If it was to fail to reach an agreement with its creditors in the next seven months, it would likely become Spains largest even bankruptcy, with the loss of 24,000 jobs.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.
Popular content
Share
By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.
Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.
You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.
Further information on data privacy can be found in our Data Protection Policy.